Which of the following is a reason that GDP might underestimate the actual production and well-being in an economy?

Choose 1 answer:
(A) GDP is adjusted for changes in product quality and variety over time.
(B) GDP excludes production not traded in markets.
(C) GDP includes how difficult production is for workers.
(D) GDP ignores income distribution.
(E) GDP ignores sustainability.

Question

Which of the following is a reason that GDP might underestimate the actual production and well-being in an economy?

Choose 1 answer:
(A) GDP is adjusted for changes in product quality and variety over time.
(B) GDP excludes production not traded in markets.
(C) GDP includes how difficult production is for workers.
(D) GDP ignores income distribution.
(E) GDP ignores sustainability.

Accepted Answer

***B*** ∻Key Concept∻ ⚹Non-market production⚹ ∻Explanation∻ ⚹GDP excludes the value of goods and services that are not traded in formal markets, such as household labor and volunteer work, which can lead to an underestimation of actual production and well-being.⚹◊How can changes in product quality and variety over time impact the accuracy of GDP as a measure of actual production and well-being in an economy according to the Gross Domestic Product formula $ ext{GDP} = C + I + G + (X-M)$?⍭ Generate me a similar question◊

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