How Is GDP Computed

question 86

Multiple Choice

How is GDP computed?

• A) add up the quantities of all final goods and services within a country
• B) add up the cost of producing final goods and services within a country
• C) use weights determined by a survey regarding how much people value different sorts of goods and services to compute GDP as a weighted average
• D) add up the market values of all final goods and services produced within a country in a given period of time

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Definitions:

Market System

An economic system in which decisions regarding investment, production, and distribution are based on supply and demand, with minimal government interference.

Scarcity

The limits placed on the amounts and types of goods and services available for consumption as the result of there being only limited economic resources from which to produce output; the fundamental economic constraint that creates opportunity costs and that necessitates the use of marginal analysis (cost-benefit analysis) to make optimal choices.

Mixed Capitalism

An economic system blending elements of capitalism and socialism, featuring private enterprise alongside government regulation and interventions.

Invisible Hand

A concept introduced by Adam Smith to describe the self-regulating nature of the marketplace, where individual self-interests inadvertently benefit society.