Multiple Choice
Which of the following is considered a component of government purchases in the calculation of GDP?
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10. Measuring National Output and Income
Expenditure Approach for Measuring GDP
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following best defines Gross Domestic Product (GDP)?
A
The total value of all intermediate goods produced within a country in a given year.
B
The total income earned by a country's residents, including income from abroad.
C
The total market value of all final goods and services produced within a country in a given period of time.
D
The total market value of all goods and services produced by a country's citizens, regardless of location.
Verified step by step guidance1
Step 1: Understand that Gross Domestic Product (GDP) measures the economic output within a country's borders during a specific time period, usually a year or a quarter.
Step 2: Recognize that GDP includes only the market value of final goods and services to avoid double counting, which would happen if intermediate goods were included.
Step 3: Note that GDP focuses on production within the country, regardless of whether the producers are citizens or foreign entities operating domestically.
Step 4: Differentiate GDP from Gross National Product (GNP), which accounts for the total income earned by a country's residents, including income from abroad, unlike GDP which is location-based.
Step 5: Conclude that the best definition of GDP is the total market value of all final goods and services produced within a country in a given period of time.
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