Question

Question 1 0.5 pts In-kind wages are not included in GDP. True False Question 2 0.5 pts If the value of intermediate goods and services are included in GDP, then: GDP would act as a true indicator of economic welfare, it would lead to depreciation GDP would be understated. there would be double-counting. GDP would be able to give an exact estimate of the inventory in an economy.

Answer 1

1) All final goods and services are produced using factors of production. By summing up the factor payments, we can find the value of GDP. Some adjustments are required to balance the account.

GDP = Compensation of employees + Rent + Interest + Proprietor’s Income + Corporate Profits + Indirect business taxes + Depreciation + Net foreign factor income

Hence Wages are included in the GDP . The above statement is false .

2) The expenditure approach is to add up the market value of all domestic expenditures made on final goods and services in a single year. Final goods and services are goods and services that have been purchased for final use or goods and services that will not be resold or used in production within the year. Intermediate goods and services, which are used in the production of final goods and services, are not included in the expenditure approach to GDP because expenditures on intermediate goods and services are included in the market value of expenditures made on final goods and services. Including expenditures on both intermediate and final goods and services would lead to double counting and an exaggeration of the true market value of GDP.,.

Hence (D) part is a correct answer