Question

Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following activities are either not accounted for or are measured inaccurately in calculations of GDP for the United States? Check all that apply. The costs of overfishing and other overly intensive uses of resources The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government Funds spent by city governments to renovate their buildings A car that is made in Canada, and sold in the United States The quality of goods available to consumers

Answer 1

Explanation:

GDP formula is :  

GDP= Consumption (C)+ Investment (I)+ Government expenditure (G)+ Net exports (exports-imports)  

1.The costs of overfishing and other overly intensive uses of resources  

It is not accounted because GDP only measures the market value of goods and services produced. The cost of overfishing does not fit in any GDP account.  

2. The value of babysitting services, when the babysitter is paid in cash and the transaction isn´t reported

Reported cash services often sum in the consume account but if there is no record it is not accounted in the GDP calculation.

3.  Funds spent by city governments to renovate their buildings

It is accounted in the GDP calculation as a government expense (G)

4. A car that is made in Canada, and sold in the United States

It is accounted because it is consumed in the United States. This should be included in the imports account.

5. The quality of goods available to consumers.  

The quality is measured in some way because prices reveal at some level the good or service quality. But it is not an accurate measure because there are some goods and services which quality is not represented in their price.