Question

Which statement about GDP is most accurate?

a. In measuring the value of production, GDP includes most production that occurs outside of markets
b. If a business firm is polluting, GDP captures the value of the firm's output but not the harm caused by dirtier air
c. GDP numbers tell us what is happening to the distribution of income
d. GDP is a good measure of economic welfare for all purposes

Answer 1

The statement about GDP that is most accurate is option b: If a business firm is polluting, GDP captures the value of the firm's output but not the harm caused by dirtier air.

Step-by-step explanation:

The most accurate statement about GDP is option b: If a business firm is polluting, GDP captures the value of the firm's output but not the harm caused by dirtier air. GDP is a measure of the value of all final goods and services produced within a country in a year, and it does not take into account externalities such as pollution. Therefore, GDP can capture the economic value of a firm's output without considering the negative impact on the environment or public health. For a more comprehensive measure of economic welfare, other indicators such as the Genuine Progress Indicator (GPI) or the Human Development Index (HDI) are used.