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 scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply. The value produced when you wash your own car at home Federal government paychecks to soldiers The costs of overfishing and other overly intensive uses of resources The quality of goods available to consumers

Answer 1

Explanation:

Remember that the GDP formula is :

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

1.The value produced when you wash your own car at home.

Because no one pays for it, this is not included in the GDP calculation.

2.Federal government paychecks to soldiers.

It is included because it is a government expenditure. It is included in this account (G).

3.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.

4. 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.