Asked by Bryce Bloomquist on Jun 17, 2024
Verified
We use the value added approach in calculating GDP to
A) avoid double counting.
B) account for market price differences.
C) account for changes in population.
D) account for consumer income differences.
Value Added Approach
This is a method for calculating GDP that sums the values added at each stage of production, avoiding the double-counting of intermediate goods.
Calculating GDP
The process of estimating the total monetary value of all finished goods and services produced within a country's borders in a specific time period.
Double Counting
The mistake of counting the same item or transaction more than once when calculating economic indicators, leading to inaccuracies.
- Understand the calculation methods of GDP, including the value-added approach.
Verified Answer
JG
Jessica GonzalezJun 21, 2024
Final Answer :
A
Explanation :
The value added approach is used to avoid double counting in the calculation of GDP. This approach measures GDP by adding up the value of all final goods and services produced in an economy, while subtracting the value of intermediate goods and services used in their production to avoid double counting.
Learning Objectives
- Understand the calculation methods of GDP, including the value-added approach.