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Which of the following gives the CORRECT explanation of Gross Domestic Product?
A. The value of final goods and services is added for secondary and tertiary sectors for one year.
B. The value of every good and service is added up to for all the three sectors for one year.
C. The value of final goods and services is added up for all the three sectors for one year.
D. The value of goods is added for the primary sector for one year.
Answer:
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So, the correct answer is (C): The value of final goods and services is added up for all the three sectors for one-year
Explanation
-
(A)
The value of final goods and services is added for secondary and tertiary sectors for one year. This is
incorrect
because this excludes the goods and services produced in the primary sector.
-
(B)The value of every good and service is added up to for all the three sectors for one year. This is
incorrect
because to avoid double counting value of every good and service for all the three sectors is not added in the GDP.
-
(C) The value of final goods and services is added up for all the three sectors for one year. This is
correct
as
GDP
is the
value
of all the
final goods and services
produced
within a
financial year.
It is calculated by using the formula which is Total GDP = GDP of Primary + GDP of Secondary + GDP of Tertiary.
- (D) The value of goods is added for the primary sector for one year This is incorrect because the in calculating GDP the value of final goods and services for all the sectors is added not only the primary sector..
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