What does gross domestic product (GDP) measure?

• A. The total income earned by a country's citizens, including income from abroad
• B. The total market value of all final goods and services produced within a country in a given period
• C. The total amount of money in circulation within a country's economy
• D. The total value of all intermediate goods produced within a country

Answer: (B)

Verified step by step guidance

1. Understand that Gross Domestic Product (GDP) is a measure used in macroeconomics to assess the economic performance of a country over a specific period.
2. Recognize that GDP focuses on the production side of the economy, specifically measuring the value of goods and services produced.
3. Note that GDP includes only the market value of final goods and services to avoid double counting, excluding intermediate goods which are used to produce final goods.
4. Remember that GDP is confined to production within the geographical boundaries of a country, regardless of who owns the production factors (citizens or foreigners).
5. Conclude that GDP measures the total market value of all final goods and services produced within a country in a given period, not total income of citizens, money supply, or intermediate goods.