What does gross domestic product (GDP) measure?

• A. The average income of household
• B. The total value of all goods and services produced in an economy
• C. The economic performance of the agricultural sector
• D. The distribution of wealth across population

Answer: (B)

Gross Domestic Product (GDP) serves as a comprehensive metric for evaluating the economic performance of a nation. It measures the total monetary value of all finished goods and services produced within a country's borders in a specific time period, typically annually or quarterly. By encompassing all sectors of the economy, GDP provides a clear indication of overall economic activity and productivity.

The correct answer captures this essence, as it reflects the aggregate output of the economy, summing up consumption, investment, government spending, and net exports (exports minus imports). This makes GDP a vital indicator for understanding economic growth, making comparisons across different economies, and informing fiscal and monetary policy.

In contrast, other options focus on narrower aspects of the economic landscape, such as household income, agricultural performance, or wealth distribution, none of which encapsulate the broader concept of economic production that GDP embodies. Consequently, those areas do not provide the complete picture that GDP offers regarding a nation's economic health.