The correct option is 2 and 3 only.
Explanation
Gross Domestic Product (GDP) is the standard measure of the value added created through the production of goods and services in a country during a certain period. It functions as a comprehensive scorecard of a given country’s economic health.
- Statement 1 is Incorrect: GDP is defined as the market value of all final goods and services produced within the domestic territory of a country during a specific period (usually a year). It explicitly excludes intermediate goods (goods used to produce other goods) to avoid the error of double counting. For instance, the value of steel used in manufacturing a car is included in the final price of the car and is not counted separately.
- Statement 2 is Correct: The calculation of GDP aggregates the gross value added by all resident producers in the economy. This encompasses production activities across all three major sectors: Agriculture and Allied Sectors (Primary), Industry (Secondary), and Services (Tertiary).
- Statement 3 is Correct: GDP is widely considered the primary indicator of economic growth. A rising GDP signifies that the economy is producing more goods and services, generating income, and expanding in size. While it does not measure qualitative aspects like human welfare or income distribution (which fall under economic development), it remains the standard metric for quantitative economic growth.
Key Takeaway: The definition of GDP strictly applies to final goods to prevent double counting and covers production within the domestic territory across all economic sectors.