In an effort to measure the state of its economy, a country decides to use its gross domestic product. Which statement is true regarding what this commonly used measure can reveal about the country's economy?

It factors GDP in relation to the country's population.

It cannot be used to identify the country's economic expansion or contraction

It includes profits from the country's corporate overseas operations.

It includes profits earned by foreign companies within the country.

Question

Ana Lewis

Business

20 September, 18:08

In an effort to measure the state of its economy, a country decides to use its gross domestic product. Which statement is true regarding what this commonly used measure can reveal about the country's economy?

It factors GDP in relation to the country's population.

It cannot be used to identify the country's economic expansion or contraction

It includes profits from the country's corporate overseas operations.

It includes profits earned by foreign companies within the country.

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Answers (1)

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Montgomery · Answer 1

It factors GDP in relation to the country's population

Explanation:

The second option "It cannot be used to identify the country's economic expansion or contraction" is incorrect because GDP can be used to tell if the economy of a nation is healthy or if it is heading into recession. Also, GDP cannot tell you the profit of corporate oversea operations, neither can it tell you the profit earned by foreign companies operating within the country, it can only tell the value of all products and services that were produced in a country within a period. However, GDP per capita is a measure of the gross domestic product against the population of the country, and hence the correct option is that It factors GDP in relation to the country's population.