Question

Choose the multiple choice answers which, when strung together, create an accurate definition of GDP.

The U.S. nominal gross domestic product is
A.all intermediate goods and services
B.all goods and services
C.all final goods and services
D.all final goods

Answer 1

Nominal GDP is the total market value of all final goods and services produced in a nation in a year, reflecting the nation's economic activity without double counting intermediate stages of production.

Step-by-step explanation:

The correct multiple choice answers, when strung together, that define the U.S. nominal gross domestic product (GDP) are B.all goods and services and C.all final goods and services. GDP is the current value of all final goods and services produced within a nation's borders during a specific period, typically one year. It includes the sum of all economic activity within the country and avoids double counting by only considering the value of final goods and services, thus not including intermediate goods or multiple stages of production.

For instance, if statisticians count the value of tires made by a tire manufacturer and then count those same tires again when they are part of a finished truck, it would result in double counting. The truck's price already incorporates the value of the tires, highlighting why only the final product's value, in this case, the truck, should be included in the GDP calculation. This careful approach ensures that the nation's economic output is accurately measured without inflation due to double counting.