In computing GDP,market prices are used to value final goods and services because

Question

Quizplus · Accepted Answer

Market prices reflect the values of goods and services, and therefore using market prices to value final goods and services in computing GDP gives an accurate representation of the economic activity in a given time period. Option A is incorrect as market prices do change over time due to inflation and other economic factors. Option C is incorrect as price ceilings and floors are not determined by the government for all goods and services, and only apply in certain situations. Option D is incorrect as market prices are commonly used in computing GDP.

In Computing GDP,market Prices Are Used to Value Final Goods