Social Science (087) — AI-generated practice question

Adding wheat + flour + biscuits together is incorrect because it leads to double counting.

Wheat and flour are intermediate goods — they are used up in producing the final good (biscuits). The value of the final good (biscuits = Rs 80) already includes the value of flour (Rs 25), which in turn includes the value of wheat (Rs 20). If we add all three separately, we count the value of wheat three times and the value of flour twice.

Only final goods and services should be counted in GDP to avoid this error.

Source: Comparing the Three Sectors, Chapter 2

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• The key term examiners expect is double counting — say it explicitly.
• Distinguish intermediate goods (wheat, flour) from final goods (biscuits) using the textbook's own example and figures (Rs 20, Rs 25, Rs 80).
• End with the rule: only final goods are included in GDP.
• 3 marks = roughly one defining point + one explanation with example + one concluding rule. This answer covers all three.