What is Gross Domestic Product (GDP)?

Gross Domestic Product (GDP) is defined as the total value of all final goods and services produced within a country during a specific time period. This definition encompasses all economic activities and transactions that occur in the domestic market, focusing on the end products that are ready for consumption. By measuring the final output, GDP avoids double counting, as it does not include intermediate goods which are used in the production of final goods.

This measure serves as an important indicator of a country’s economic performance and is commonly used to gauge the health of an economy. It reflects the overall economic activity, job creation, and spending within the country, allowing for comparisons over time and between different economies.

In contrast, the other choices provided are narrower in scope. For example, limiting GDP to only the value of services produced ignores a significant portion of economic activity that comes from the production of goods. Focusing solely on imports does not contribute to the measure of domestic output and would not accurately capture the economic activity that GDP aims to represent. Lastly, although adjusting for inflation is an important aspect of measuring economic output over time (resulting in measures like real GDP), the basic definition of GDP itself does not consider inflation; it is simply the total value of all final goods and services produced domest