Question

Which of the following statements about gross domestic product are true? I. Gross domestic product is best described as the full-employment output of an economy. II. Real gross domestic product is adjusted for price level changes using a price index. III. Gross domestic product is the final output produced by an economy in a given time period.

Answer 1

Answer:

II and III only.

Explanation:

The Gross Domestic Products (GDP) is the measure of the total market value of all finished goods and services made within a country during a specific period.

Simply stated, GDP is a measure of the total income of all individuals in an economy and the total expenses incurred on the economy's output of goods and services in a particular country. The Gross Domestic Products (GDP) of a country's economy gives an insight to it's social well-being, these includes;

I. Real gross domestic product is adjusted for price level changes using a price index. This simply means, it is adjusted for inflation to measure the value of goods and services produced by a country in a specific period of time.

Mathematically, $Real GDP = Nominal GDP ÷ GDP deflator$

II. Gross domestic product is the final output produced by an economy in a given time period.