What is Effectively measured by nominal GDP?

Nominal GDP is defined as the market value of all final goods and services produced within a country in a given period, typically measured annually or quarterly. This measure includes total consumption, investment, government spending, and net exports, reflecting the economic performance of a nation at current market prices. Since it captures all produced final goods and services, it serves as a comprehensive representation of a country's economic output for the given timeframe.

The other options do not accurately describe what nominal GDP measures. While the overall health of an economy (one of the other choices) can be inferred from various economic indicators, nominal GDP alone does not account for factors such as inflation or unemployment, which are essential for a holistic view of economic health. Focusing solely on consumer goods output incorrectly limits GDP's comprehensive quantification of all final goods and services, which includes capital goods and services. Lastly, stating that nominal GDP only measures the value of goods sold within the domestic market fails to recognize that GDP encompasses all final production occurring within a country, including services, whether they are produced for the local market or not. Therefore, the correct understanding of nominal GDP aligns squarely with its definition as the market value of all final goods and services produced in the economy.