Why is GDP computed using market prices as the value of final goods and services?
A) because market prices do not change much, so it is easy to make comparisons between years
B) because if market prices are out of line with how people value goods, the government sets ceilings and floors on them
C) because costs change too much to reflect the value of goods and services
D) because market prices reflect the value of goods and services

Question

Quizplus · Accepted Answer

Market prices are a reflection of how much people are willing to pay for goods and services, and therefore, they reflect the value of those goods and services. This is why GDP is computed using market prices as the value of final goods and services.

Why Is GDP Computed Using Market Prices as the Value