What is gross domestic product?
A. average quantity of goods manufactured in a country in a year
B. total value of goods and services produced in a country in a year
C. total income of businesses and workers within a country in a year
D. average rate of manufacturing expansion in a country in a year
Answer (1)
The question asks for the definition of Gross Domestic Product (GDP).
GDP measures a country's economic output.
Option 1 is incorrect because GDP is about value, not quantity, and includes services.
Option 2, 'total value of goods and services produced in a country in a year,' is the correct definition.
Options 3 and 4 are related but not the direct definition.
Therefore, the answer is total value of goods and services produced in a country in a year .
Explanation
Understanding the Question We need to identify the correct definition of Gross Domestic Product (GDP) from the given options. GDP is a measure of a country's economic activity.
Analyzing the Options Let's analyze each option:
Option 1: average quantity of goods manufactured in a country in a year. This is incorrect because GDP focuses on the value of goods and services, not just the quantity of manufactured goods. Also, GDP includes services, not just goods.
Option 2: total value of goods and services produced in a country in a year. This aligns with the standard definition of GDP.
Option 3: total income of businesses and workers within a country in a year. This is related to GDP but represents a different way of measuring economic activity (the income approach).
Option 4: average rate of manufacturing expansion in a country in a year. This is incorrect because GDP measures the total value of all goods and services, not just manufacturing, and it's a total value, not a rate of expansion.
Determining the Correct Definition Based on the analysis, the correct definition of Gross Domestic Product (GDP) is the total value of goods and services produced in a country in a year.
Examples
Understanding GDP is crucial for assessing a country's economic health. For example, if a country's GDP increases from one year to the next, it indicates that the country is producing more goods and services, which can lead to job creation and higher living standards. Conversely, a decrease in GDP can signal an economic recession. Governments and businesses use GDP data to make informed decisions about economic policy and investment strategies. For instance, knowing the GDP helps in budgeting and planning for future growth.
