What does gross domestic product measure?

• A. The total profit of businesses in a country
• B. The total value of goods and services produced in a country in a year
• C. The overall employment rate in a country
• D. The amount of currency in circulation

Answer: (B)

Gross Domestic Product (GDP) measures the total value of all goods and services produced within a country during a specific period, usually a year. This provides a comprehensive overview of a nation's economic activity and health. By assessing GDP, economists can gauge the size and performance of an economy, allowing for comparisons over time or between different economies. The value represented in GDP includes various sectors, such as manufacturing, services, and agriculture, highlighting the overall productivity of the nation.

The other choices do not capture the broad aspect of economic activity that GDP reflects. For example, while the total profit of businesses is relevant to understanding individual business health, it does not encompass the total economic output. Similarly, the overall employment rate deals with labor market conditions, and the amount of currency in circulation pertains more to monetary policy rather than overall economic performance. Hence, focusing on the total value of goods and services produced provides the most comprehensive measure of a country's economic output, making it the right answer.