ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following is true regarding Gross Domestic Product (GDP)?
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Intermediate goods are not counted because GDP does not include imports from foreign countries
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Household production, like home auto repair, is counted in GDP
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Transfer payments are not included in GDP because government expenditures are not counted
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GDP includes the purchase and sale of all goods and services in a country in one year
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GDP, adjusted for inflation, measures economic growth over time
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Explanation:
Detailed explanation-1: -Nominal Gross Domestic Product (GDP) and Real GDP both quantify the total value of all goods produced in a country in a year. However, real GDP is adjusted for inflation, while nominal GDP isn’t.
Detailed explanation-2: -Answer and Explanation: The correct answer is (i). Nominal GDP is the aggregate value of all final goods and services at current prices, whereas real GDP is the aggregate value of all final goods and services at constant prices.
Detailed explanation-3: -Gross Domestic Product does not include the value of final goods and services produced in the transboundary of a country. Hence statement 1 is incorrect.
There is 1 question to complete.