Question

Why do economists measure the gross domestic product?

A. To estimate how much the government must tax to avoid a budget deficit
B. To enable the Fed to decide whether to increase or decrease the money supply
C. To see how much economic activity there is in a particular country
D. To determine whether consumers and producers are making free choices

Answer 1

Economists measure the gross domestic product (GDP) to determine the size and health of a country's economy by calculating the total value of all goods and services produced within a country in a given year.

Step-by-step explanation:

Economists measure the gross domestic product (GDP) as a fundamental indicator to gauge the health and size of a country's economy. It comprises the total dollar value of all final goods and services produced within a country over a specific time period, usually one year. By multiplying the quantity of everything produced by the prices at which each product is sold and summing it up, we get the GDP. This measurement reflects the economic activity in a country and is essential for many purposes, including:

• To see how much economic activity there is in a particular country
• To assess economic performance over time
• To compare the size and growth of economies across different countries

This aligns with the options provided, specifically to see how much economic activity there is in a particular country (option C).