Answer:
(i)
Economists suggest that the values of goods and services should be used rather
than adding up the actual numbers. The value of goods and services in the three
sectors are calculated and then added up.
(ii) Not every good (or service), that is
produced and sold, needs to be counted. It makes sense only to include final
goods and services.
Eg: A farmer sells wheat to a flour mill
for `
8 per kg. The mill grinds the wheat and sells the flour to a biscuit company
for `
10 per kg. The biscuit company uses flour, sugar and oil to make the packets of
biscuits. It sells biscuits in the market to the consumer for ` 15
per packet. Now, biscuits are the final goods, i.e., goods that reach the
consumer.
(iii) Intermediate goods are used up in
producing final goods and services the value of final goods already includes
the value of all the intermediate goods that are used in making the final
goods.
So, the value of final goods and services
produced in each sector during a particular year, provides the total production
of the sector for that year. And the sum of production in three sectors gives
us the 'Gross Domestic Product or GDP'.
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