The total market value of all goods and services produced by a country in a year is known as the country's

• A. Gross national product (GNP)
• B. Net domestic product
• C. Gross domestic product (GDP)
• D. Balance of payments

Answer: (C)

Gross domestic product (GDP) is the total market value of all final goods and services produced within a country’s borders in a given year. The key point is location: GDP measures domestic production, regardless of who owns the firms doing the producing. This is why output by foreign-owned companies inside the country is included, while production by the country’s residents abroad is not.

Net domestic product would subtract depreciation from GDP, so it reflects wear and tear rather than the raw level of annual production. The balance of payments records a country’s international financial transactions, not its overall annual production. Gross national product would instead include the value of goods and services produced by the country’s residents abroad, which isn’t what’s being described here.