Chapter 3R, Problem 8MCQ

To determine

The question requires us to determine the factor which is included in the calculation of GDP.

Explanation of Solution

The calculation of GDP includes domestically produced final goods and services such as capital goods, change in inventory, and newly constructed structures in financial years. 

It doesn’t include intermediate goods and services (to avoid the double entry problem), used goods, stocks and bonds, foreign-produced goods and services, and other items.

So, domestically produced capital goods are included in the calculation of the GDP.

Option “e” is correct.

Economics Concept Introduction

The gross domestic product (GDP) is the measurement of the final goods and services produced in an economy in a financial year. GDP is the indication of economic growth. It doesn’t say much about the quality of growth.