Back

Intermediate · 3 min

What GDP measures

Gross domestic product measures the value of final goods and services produced within an economy during a period. Intermediate inputs are excluded from the final-goods total to avoid double counting. GDP is useful for measuring production but does not directly measure distribution, unpaid household work, or environmental damage.

Practice

A baker buys flour for 20 and sells the bread made from it for 50. Using the final-goods method, what is counted?