A term used to describe the problematic situation that occurs when the costs of intermediate goods used by a business to produce a finished good are included in the computation of
a nation's gross domestic product. Since the final price of a good already includes the value of all the intermediate goods used to produce it, including the price of intermediate goods when calculating gross domestic product would involve double counting.
Double counting is an error caused as a result of illogical calculation. This term is used in economics to refer to the faulty practice of counting the value of a nation's goods more than once. Since goods
are produced in stages, through specialized channels of production, many intermediate goods are used to produce a final good. If the values of each of these intermediate goods is added together, without
subtracting expenditures incurred during the production process, the error of double counting will be
committed.