Which of the following is true about gross domestic product (GDP)?

• A. GDP includes the value of intermediate goods to avoid double counting.
• B. GDP accounts for non-market transactions such as household labor.
• C. GDP measures the total market value of all final goods and services produced within a country's borders in a given period.
• D. GDP measures the total income earned by a country's citizens regardless of where they are located.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the definition of Gross Domestic Product (GDP). GDP measures the total market value of all final goods and services produced within a country's borders during a specific time period.
2. Step 2: Recognize that GDP includes only final goods and services to avoid double counting. Intermediate goods, which are used to produce final goods, are excluded from GDP calculations.
3. Step 3: Note that GDP does not account for non-market transactions such as household labor or volunteer work because these activities do not have a market price.
4. Step 4: Differentiate GDP from Gross National Product (GNP). While GDP focuses on production within a country's borders, GNP measures the total income earned by a country's citizens regardless of their location.
5. Step 5: Conclude that the correct statement about GDP is that it measures the total market value of all final goods and services produced within a country's borders in a given period.