Suppose an individual wishes to provide a definition of GDP for a given period. Which of the following phrases would be used when defining GDP?
A) Final and intermediate goods and services.
B) Final and intermediate goods and services produced by the private sector only.
C) Final goods and services purchased by domestic households.
D) Final goods and services.
E) Final and intermediate goods and services, plus raw materials.

Question

Quizplus · Accepted Answer

GDP stands for Gross Domestic Product, which is the total value of all final goods and services produced within a country's borders during a specific period of time (usually a year). Only final goods and services are included in GDP as they represent the end product purchased by households, businesses, and government. Intermediate goods and services are not included in GDP because they are used in the production of final goods and services and thus their value is already accounted for within the final goods and services. Raw materials are also not included in GDP as they are not yet in their final form and must undergo production before they become a final good or service.

Suppose an Individual Wishes to Provide a Definition of GDP