Social Science (087) — AI-generated practice question

Intermediate goods are goods used up in the production of other goods (e.g., wheat flour used to make biscuits). Final goods are goods that reach the final consumer (e.g., biscuits).

Only the value of final goods is counted in GDP because the value of final goods already includes the value of all intermediate goods used in their production. Counting intermediate goods separately would mean counting the same value multiple times (double counting).

Source: Comparing the Three Sectors, Chapter 2

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• Examiners want a clear one-line definition of each term with an example, then a direct reason for counting only final goods.
• The key phrase to use is "double counting" or "counting the same value more than once."
• The biscuit example from the textbook (wheat → flour → biscuits) is the ideal illustration but keep it brief at 2 marks.
• Do not write more than 3–4 sentences total.