Question

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 of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government The loss of enjoyment people incur when scenic land is converted to commercial use The leisure time enjoyed by households Expenditures on federal highways

Answer 1

Expenditures on federal highways.

Answer: Option 4.

Explanation:

GDP does not account for off-the-books activities, such as babysitting, which add value to the economy but are not reported to the government. GDP doesn't take into account the loss of enjoyment people incur when scenic land is converted to commercial use. All of these, though important in measuring the true quality of life within a country, would be far too difficult to measure accurately.

But the expenditure that the government will make on the construction of the highways of the country will be accounted for.