Use the following to answer questions:
Figure: Expanded Circular-Flow Model
-(Figure: Expanded Circular-Flow Model) Look at the figure Expanded Circular-Flow Model. What is GDP?
A)$200
B)$700
C)$1,000
D)$1,080

Question

Use the following to answer questions:
Figure: Expanded Circular-Flow Model 
-(Figure: Expanded Circular-Flow Model) Look at the figure Expanded Circular-Flow Model. What is GDP?
A)$200 
B)$700 
C)$1,000 
D)$1,080

Quizplus · Accepted Answer

GDP is the total value of all final goods and services produced within a country's borders in a given time period. In the figure, the sum of all final goods and services produced (i.e., all transactions in the product market) is $1,000. Therefore, the GDP is $1,000. Option A is incorrect because it only represents the value of the final goods and services produced by firms. Option B is incorrect because it only includes the value of final goods and services bought by households. Option D is incorrect because it includes the value of intermediate goods and services, which are not included in GDP, as they are already counted in the value of final goods and services.

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