With reference to Gross Domestic Product (GDP), consider the following statements:
1. GDP by definition measures production within a country’s borders and excludes global production by its enterprises.
2. Real GDP reflects monetary values adjusted for inflation, whereas Nominal GDP accounts for both inflation and population changes.
3. The calculation of GDP includes both tangible goods and intangible services produced within a country during a specific period.

Which of the statements given above is/are correct?
(a) 3 only
(b) 2 and 3 only
(c ) 1 and 3 only
(d) 1, 2, and 3

Question

With reference to Gross Domestic Product (GDP), consider the following statements:
1. GDP by definition measures production within a country&rsquo;s borders and excludes global production by its enterprises.
2. Real GDP reflects monetary values adjusted for inflation, whereas Nominal GDP accounts for both inflation and population changes.
3. The calculation of GDP includes both tangible goods and intangible services produced within a country during a specific period.

Which of the statements given above is/are correct?
(a) 3 only
(b) 2 and 3 only
(c ) 1 and 3 only
(d) 1, 2, and 3

ONLiNE UPSC · Accepted Answer

Statement 1 is correct: GDP includes the monetary value of all finished goods (tangible) and services (intangible) produced within a country's borders during a specific period of time. Services, such as healthcare, education, and financial services, are indeed part of GDP.

Statement 2 is not correct: Real GDP is adjusted for inflation, which allows it to reflect the true value of goods and services over time, removing the impact of price changes.
Nominal GDP, however, does not account for inflation. It is calculated at current market prices, so it can be influenced by price changes, but it does not factor in population changes. Population adjustments are done separately to calculate GDP per capita, which is used to analyze the standard of living.

Statement 3 is correct: GDP measures the total value of goods and services produced within a country&rsquo;s borders, regardless of whether the production is done by domestic or foreign enterprises. It does not include the production of a country&rsquo;s enterprises abroad, which would be included in Gross National Product (GNP).

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M Question 1	⏱ 0
With reference to Gross Domestic Product (GDP), consider the following statements: 1. GDP by definition measures production within a country’s borders and excludes global production by its enterprises. 2. Real GDP reflects monetary values adjusted for inflation, whereas Nominal GDP accounts for both inflation and population changes. 3. The calculation of GDP includes both tangible goods and intangible services produced within a country during a specific period. Which of the statements given above is/are correct? (a) 3 only (b) 2 and 3 only (c ) 1 and 3 only (d) 1, 2, and 3