Final answer:
The statement that GDP means both the amount produced by an economy and the amount of income earned by an economy is true, as GDP measures the total value of all final goods and services within a country and reflects total national income.
Step-by-step explanation:
The statement is true: GDP, or Gross Domestic Product, represents both the amount produced by an economy and the amount of income earned by an economy. It is calculated as the total monetary value of all final goods and services produced within a country's borders in a specific time period, and it also reflects the total income received by all sectors of an economy. To avoid double counting, only the value of final goods is considered—those at the furthest stage of production at the end of the year—ensuring that intermediate goods, like the tires on a new truck, are not included in the calculation twice.
GDP is an important indicator that helps to gauge the health of a country's economy. It includes all private and public consumption, government outlays, investments, additions to private inventories, paid-in construction costs, and the foreign balance of trade (exports are added, imports are subtracted). Since all these activities contribute to the income of a nation's residents, the value of a nation's output is effectively equal to the total value of a nation's income, making GDP a key economic measure for both production and income.