Definition
- Intermediate goods
- Intermediate goods are goods that go into producing other goods, left out as separate items so that their value is not counted twice.
Example
Can you think of an example of intermediate goods?
A brewer buys £40,000 of hops and malt and sells the beer for £150,000. GDP counts the £150,000 of beer. Adding the hops and malt as well would count them twice, because they are already inside the beer's price.
Test yourself
Can you name the five things GDP leaves out or misses?