Which statement best defines Gross Domestic Product (GDP)?

• A. GDP rising over time is a sign of economic growth
• B. Value of goods/services being produced
• C. A measure of national income
• D. The total value of imports in a year

Answer: (B)

GDP measures the total market value of all final goods and services produced within a country in a given period. That is why the statement referring to the value of goods and services being produced is the best fit: it directly captures production and its monetary value in a specific time frame. GDP is not simply a measure of income, though it relates to national income, and it isn’t the total value of imports (imports are part of net exports, not overall production). Saying GDP rises over time describes a trend (economic growth) rather than what GDP is. In practice, GDP can be calculated from expenditure (consumption, investment, government spending, and net exports) or from the production side (value added), and it can be measured in current or constant prices.