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
please select the best answer from the choices provided

Explanation:

To determine which factors are considered in GDP calculation, we recall that GDP (Gross Domestic Product) measures the market value of all final goods and services produced within a country's borders in a specific time period. Let's analyze each factor:

• I. Goods produced within a country by its citizens: These are included in GDP because they are produced within the country’s borders (regardless of the producer’s citizenship, but in this case, citizens producing within the country still fall under domestic production).
• II. Goods produced within a country by non - citizen residents: Since production occurs within the country’s borders, these are included in GDP. GDP focuses on production within the geographic boundary, not the producer’s citizenship.
• III. Goods produced within a country for use in producing other goods: These are intermediate goods. GDP only counts final goods (to avoid double - counting). Intermediate goods are used up in the production of other goods, so they are not included in GDP.
• IV. Goods produced by a country’s citizens outside its borders: These are part of GNP (Gross National Product), not GDP. GDP is about domestic (within - border) production, so these are excluded.

So, factors I and II are included in GDP calculation.

Answer:

c. I and II