Which of the following statements is/are correct?
I. Only marketed goods are considered while estimating Gross Domestic Product (GDP).
II. The work done by a woman at her home is outside the purview of Gross Domestic Product.
III. In estimating GDP, only final goods and services are considered.
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. I, II and III.
Gross Domestic Product is the total production of goods and services within the economic territory of the country for a specified time.
- It is calculated for finished and final goods and services.
- GDP = C + I + G + (X-I) is the formula through which GDP is calculated.
- C is consumption, i.e. the money spent on the consumption of food, rent, jewelry, etc.
- I is Investment, i.e. this includes the construction of a new mine, purchase of software, or purchase of machinery and equipment for a factory. Spending by households (not the government) on new houses is also included in Investment.
- G is Government spending, i.e. the sum of government expenditures on final goods and services. It includes salaries of public servants, the purchase of weapons for the military, etc.
- X is export, i.e. it is the goods or services produced for the consumption of other nations.
- I is Import, i.e. it is the goods and services purchased from other nations.