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Which of the following statements about the calculation of Gross Domestic Product (GDP), is not correct?
- a)The GDP measures the aggregate production of final goods and services taking place within the domesticterritory.
- b)It does not take into account the aggregate production of final goods and services produced by foreign nationalwithin the domestic territory.
- c)In GDP calculation, negative externalities are not taken into account.
- d)In GDP calculation, the aggregate production of final goods produced by Indian citizen in the foreign territory isnot included.
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
Which of the following statements about thecalculation of Gross Domest...
- The GDP measures the aggregate production of final goods and services taking place within the domestic economy. It refers to total market value of all the final goods and services produced in an economy in a given period of time. For India, this time period is from 1st April to 31st March.
- This means it measures the value of final goods and services produced within a geographic boundary regardless of the nationality of the individual or firm. Therefore, goods and services produced by a foreign national within the territory of India, is also calculated in GDP. Hence statement (b) is the correct answer.
- In GDP, only the final output of such goods and services are included.
- The rule that only finished or final goods must be counted is necessary to avoid double or triple counting of raw materials, intermediate products, and final products. For example, the value of automobiles already includes the value of the steel, glass, rubber, and other components that have been used to make them.
- As the GDP takes into account only the goods and services produced within the domestic territory, the goods and services produced by Indian citizens in foreign territory is not included.
- GDP does not take into account externalities such as pollution from refinery of crude oil. Externalities refer to the benefits (or harms) a firm or individual causes to another for which they are not paid (or penalized).
- Externalities do not have any market in which they can be bought and sold. For example, let us suppose there is an oil refinery that refines crude petroleum and sells it in the market. The output of the refinery is the amount of oil it refines. We can estimate the value-added of the refinery by deducting the value of intermediate goods used by the refinery (crude oil in this case) from the value of its output. The value-added of the refinery will be counted as part of the GDP of the economy. But in carrying out the production the refinery may also be polluting the nearby river. This may cause harm to the people who use the water of the river.
- Hence their utility will fall. Pollution may also kill fish or other organisms of the river on which fish survive. As a result, the fishermen of the river may be losing their income and utility. Such harmful effects that the refinery is inflicting on others, for which it does not have to bear any cost, are called externalities.
- In this case, the GDP is not taking into account such negative externalities. Therefore, if we take GDP as a measure of the welfare of the economy we shall be overestimating the actual welfare. This was an example of a negative externality. There can be cases of positive externalities as well. In such cases, GDP will underestimate the actual welfare of the economy.
Most Upvoted Answer
Which of the following statements about thecalculation of Gross Domest...
The correct answer is option B: It does not take into account the aggregate production of final goods and services produced by foreign nationals within the domestic territory.
Explanation:
Gross Domestic Product (GDP) is a measure of the total value of all final goods and services produced within a country's borders over a specific period of time. It is an important indicator of the economic health and performance of a nation. However, there are certain aspects of GDP calculation that need to be understood.
1. GDP measures the aggregate production of final goods and services taking place within the domestic territory:
This statement is correct. GDP measures the total production of all final goods and services, including consumer goods, investment goods, government spending, and net exports, within the domestic territory. It includes both goods and services produced by businesses, households, and the government.
2. It does not take into account the aggregate production of final goods and services produced by foreign nationals within the domestic territory:
This statement is incorrect. GDP does take into account the aggregate production of final goods and services produced by foreign nationals within the domestic territory. Any economic activities occurring within the country's borders, regardless of whether they are conducted by domestic or foreign nationals, are included in the calculation of GDP.
3. In GDP calculation, negative externalities are not taken into account:
This statement is correct. GDP calculation does not consider negative externalities, which are the costs imposed on society due to economic activities but not reflected in market prices. Examples of negative externalities include pollution, environmental degradation, and social costs. Since GDP only measures the market value of final goods and services, it does not account for these negative effects.
4. In GDP calculation, the aggregate production of final goods produced by Indian citizens in foreign territory is not included:
This statement is correct. GDP only includes the production that takes place within the domestic territory, so the aggregate production of final goods and services produced by Indian citizens in foreign territories is not included. This is because GDP measures the economic activity within the country's borders and does not consider the activities of its citizens in other countries.
Conclusion:
In conclusion, the incorrect statement is that GDP does not take into account the aggregate production of final goods and services produced by foreign nationals within the domestic territory. GDP does include the economic activities conducted by both domestic and foreign nationals within a country's borders.
Explanation:
Gross Domestic Product (GDP) is a measure of the total value of all final goods and services produced within a country's borders over a specific period of time. It is an important indicator of the economic health and performance of a nation. However, there are certain aspects of GDP calculation that need to be understood.
1. GDP measures the aggregate production of final goods and services taking place within the domestic territory:
This statement is correct. GDP measures the total production of all final goods and services, including consumer goods, investment goods, government spending, and net exports, within the domestic territory. It includes both goods and services produced by businesses, households, and the government.
2. It does not take into account the aggregate production of final goods and services produced by foreign nationals within the domestic territory:
This statement is incorrect. GDP does take into account the aggregate production of final goods and services produced by foreign nationals within the domestic territory. Any economic activities occurring within the country's borders, regardless of whether they are conducted by domestic or foreign nationals, are included in the calculation of GDP.
3. In GDP calculation, negative externalities are not taken into account:
This statement is correct. GDP calculation does not consider negative externalities, which are the costs imposed on society due to economic activities but not reflected in market prices. Examples of negative externalities include pollution, environmental degradation, and social costs. Since GDP only measures the market value of final goods and services, it does not account for these negative effects.
4. In GDP calculation, the aggregate production of final goods produced by Indian citizens in foreign territory is not included:
This statement is correct. GDP only includes the production that takes place within the domestic territory, so the aggregate production of final goods and services produced by Indian citizens in foreign territories is not included. This is because GDP measures the economic activity within the country's borders and does not consider the activities of its citizens in other countries.
Conclusion:
In conclusion, the incorrect statement is that GDP does not take into account the aggregate production of final goods and services produced by foreign nationals within the domestic territory. GDP does include the economic activities conducted by both domestic and foreign nationals within a country's borders.
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Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer?
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Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer?.
Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer?.
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Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer?, a detailed solution for Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Which of the following statements about thecalculation of Gross Domestic Product (GDP), is not correct?a)The GDP measures the aggregateproduction of final goods and servicestaking place within the domesticterritory.b)It does not take into account theaggregate production of final goods andservices produced by foreign nationalwithin the domestic territory.c)In GDP calculation, negativeexternalities are not taken into account.d)In GDP calculation, the aggregateproduction of final goods produced byIndian citizen in the foreign territory isnot included.Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice UPSC tests.
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