When we want to know how healthy a person is, we might check their heart rate or blood pressure. To check the health of an entire national economy, economists look at a single, massive metric called Gross Domestic Product (GDP). This metric attempts to capture everything an economy produces in a neat, single number.

The word final is extremely important here. If a baker buys flour to make a cake, we only count the price of the final cake in GDP, not the flour. If we counted both, we would be double-counting the flour, artificially inflating our measurement of the economy's size. We refer to inputs like the flour as intermediate goods, and they are excluded from final GDP calculations to keep the data accurate.