Consumption goods, capital goods, final goods, intermediate goods

Correct answer: B. When it is a final capital good produced in the current year

Explanation: A newly produced machine is a capital good because it helps produce other goods and services over time. When it is produced during the current year and purchased as final investment, its value is included in GDP under investment expenditure. Therefore option B is correct. A used machine was counted when first produced, while a gift or an item without value does not create current measured output.

Correct answer: A. Treating the full values of wheat and the flour made from it as final output

Explanation: The governing accounting principle is to avoid counting the value of an intermediate good again when it is embodied in a final good. Adding the full value of wheat and then the full value of flour, and later bread, repeats the same production value. Option A therefore causes double counting. Counting only final bread or summing value added avoids this error; used-good sales are normally excluded from current GDP.