macro fundamentals, GDP, investment & growth section 3 MCQ Questions & Answers Detailed Explanation

Answer: (d)

GDP is the total final value of goods and services produced within the domestic territory of a country in a specified time period (generally a financial year).

The concept of domestic territory (economic territory) is different from the geographical or political territory of a country.

The domestic territory of a country includes the following:

1. Political frontiers of the country including its territorial waters.
2. Ships, and aircrafts operated by the residents of the country between two or more countries, for example, Air India’s services between different countries.
3. Fishing vessels, oil and natural gas rigs and floating platforms operated by the residents of the country in the international waters or engaged in extraction in areas where the country has exclusive rights of operation.
4. Embassies, consulates and military establishments of the country located in other countries, for example, the Indian embassy in the U.S.A., Japan etc. It excludes all embassies, consulates and military establishments of other countries and offices of international organisations located in India.

Thus, the domestic territory may be defined as the political frontiers of the country including its territorial waters, ships, aircraft, fishing vessels operated by the residents of the country, embassies and consulates located abroad etc.