Which of the following best describes what Gross Domestic Product (GDP) measures?

• A. The total amount of money in circulation within a country's economy
• B. The total value of all intermediate goods produced in a country
• C. The total income earned by a country's citizens, regardless of where they are located
• D. The total market value of all final goods and services produced within a country's borders in a given period

Answer: (D)

Verified step by step guidance

1. Understand that Gross Domestic Product (GDP) measures the economic activity within a country's borders during a specific time period, usually a year or a quarter.
2. Recognize that GDP includes only the market value of final goods and services, which means goods and services sold for final use, not intermediate goods used to produce other goods.
3. Note that GDP focuses on production within the country's borders, regardless of who owns the production factors (citizens or foreigners).
4. Distinguish GDP from other related concepts: for example, Gross National Product (GNP) measures the total income earned by a country's citizens regardless of location, and money supply measures the total amount of money in circulation.
5. Conclude that the best description of GDP is the total market value of all final goods and services produced within a country's borders in a given period.