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10. Which of the following is NOT a reason that real GDP is a poor measure of a nation's

economic welfare?

A)Real GDP omits measures of political freedom.
b) Real GDP does not consider the value of people's leisure time.
c) Real GDP does not include the underground economy.
D) Real GDP omits household production.

1 Answer

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Answer:

A)Real GDP omits measures of political freedom.

Step-by-step explanation:

The Real Gross Domestic Product is a measure of all the goods produced in an economy within a year but with changes in price levels triggered by inflation factored in. Political freedom does not affect economic freedom. People may be restricted politically but still, go about their normal economic activities.

Because the Real GDP basically focuses on transactions done in the markets, it might not accurately measure the growth rate because some people conduct illegal businesses underground that are not captured by the government, while some produce their goods at home. Also, leisure time is not factored and it is important because an increase in leisure time will affect time spent in activities that improve the economy.

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