General Education Development (GED) Practice Exam

What does GDP measure in a country?

1. Employment level

2. Education level

3. Total economic output

4. Wage levels

The correct answer is: Total economic output

Gross Domestic Product (GDP) measures the total economic output of a country, which encompasses the value of all goods and services produced over a specific time period, typically a year. It provides a comprehensive overview of a nation's economic performance. By calculating GDP, you can gauge how well an economy is functioning, making it a critical indicator for policymakers, economists, and analysts. The measurement of GDP takes into account various sectors, including consumer spending, business investment, government spending, and net exports (exports minus imports). This total economic output helps in comparing the economic activity of different countries and can also indicate economic growth or decline over time. In essence, GDP serves as a fundamental metric to understand the size and health of a country's economy.