Question

In the problem of double counting, which good is counted twice?

• A. Final good
• B. Intermediate good
• C. Capital good
• D. Durable good

Hint:

Avoid double counting by ensuring intermediate goods are only included in the final goods' value calculation.

Answer 1

The Correct Option is B

Step 1: Understanding double counting in economics.
Double counting occurs when the same good is counted more than once in the calculation of GDP, often in the case of intermediate goods. Intermediate goods are goods used in the production of final goods, and if they are counted as final goods, they would lead to double counting.

Step 2: Analyzing the options.
(A) Final good: Final goods are counted once in GDP calculation and are not subject to double counting.
(B) Intermediate good: Correct. Intermediate goods are used in the production of final goods and are counted as part of the value of final goods. Counting them separately in GDP would result in double counting.
(C) Capital good: Capital goods are used to produce other goods but are counted only once, so they do not contribute to double counting.
(D) Durable good: Durable goods are a type of final good and do not lead to double counting.

Step 3: Conclusion.
The correct answer is (B) Intermediate good, as these goods are counted twice in GDP calculations if not properly accounted for.