Question

GDP understates the amount of economic production in the United States because it excludes:

A
Spending for the U.S. military
B
Purchases of stocks and bonds
C
Work performed by people for their own benefit
D
Transfer payments

Answer 1

GDP does not cover production not exchanged in the market, such as self-performed tasks. The increase in women's participation in the labor force has shifted non-market production into the market economy, making GDP appear larger.

Step-by-step explanation:

GDP includes production that is exchanged in the market, but it does not cover production that is not exchanged in the market. For example, hiring someone to mow your lawn or clean your house is part of GDP, but doing these tasks yourself is not part of GDP. One remarkable change in the U.S. economy in recent decades is the growth in women's participation in the labor force. As of 1970, only about 42% of women participated in the paid labor force. By the second decade of the 2000s, nearly 60% of women participated in the paid labor force according to the Bureau of Labor Statistics. As women are now in the labor force, many of the services they used to produce in the non-market economy like food preparation and child care have shifted to some extent into the market economy, which makes the GDP appear larger even if people actually are not consuming more services.