Final answer:
The statement is True. Over a given time period, the sum of the value added by all firms is indeed equal to a country's GDP.
Step-by-step explanation:
The statement is True.
Over a given time period, the sum of the value added by all firms is indeed equal to a country's GDP. GDP measures the value of the output of all goods and services produced within the country, and this value is determined by adding up the value added by each firm. Value added refers to the increase in the market value of a product that occurs at each stage of production, from the raw materials stage to the finished product stage.
For example, let's say a farmer grows wheat, and then sells the wheat to a baker. The farmer's value added is the difference between the selling price of the wheat and the cost of the seeds and other inputs used to grow the wheat. Similarly, the baker's value added is the difference between the selling price of the bread and the cost of the wheat and other ingredients used to make the bread.