Question

Which of the following factors are considered when calculating GDP?

I. goods produced within a country by citizens of that country
II. goods produced within a country by residents who are not citizens
III. goods produced within a country for use in production of other goods
IV. goods produced by a country’s citizens outside of its borders
a.
II and III
b.
I only
c.
I and II
d.
I, II, III, and IV

Answer 1

c. I and II

GDP measures the value of final goods and services produced within a country's borders, regardless of whether the producers are citizens or non-citizen residents (I and II). It excludes production by a country's citizens abroad (that is GNP), and it does not count intermediate goods produced for use in further production (to avoid double counting).