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Chapter 6: Q. 14 (page 160)

Why must you avoid double counting when measuring GDP?

Short Answer

Expert verified

Double counting can lead to incorrect calculations in gross domestic product (GDP).

Step by step solution

01

Step1. GDP

Gross Domestic Product (GDP) is the standard measure of the value-added value created through the production of goods and services in a country during a given period.

02

Step 2. Explanation

The output is counted more than once while traveling through the stages of production. This can lead to big mistakes.

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Most popular questions from this chapter

Using data from Table 6.5 how much of the nominal GDP growth from 1980 to 1990 was real GDP and how much was inflation?

Without looking at Table 6.7, return to Figure 6.10. If we define a recession as a significant decline in national

output, can you identify any post-1960 recessions in addition to the 2008-2009 recession? (This requires a judgment

call.)

Fig. 6.10

What are the main components of measuring GDP

with what is produced?

What is the difference between a series of

economic data over time measured in nominal terms

versus the same data series over time measured in real

terms?

According to Table 6.7, how often have recessions occurred since the end of World War II (1945)?
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