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.

a) Federal government paychecks to soldiers

b) The quality of goods available to consumers

c) The loss of enjoyment people incur when scenic land is converted to commercial use

d) The value produced when you wash your own car at home

When a US company purchases and imports automotive parts from Canada to use to build cars, within the United States, this purchase increases the component of GDP, while also net exports by the same amount. Therefore, the purchase of automotive parts from Canada in US GDP.

Answer 1

GDP is the value of all the goods and services produced within the domestic territory of the country in an accounting year.

GDP= Consumption+ Investment+ Government Purchases+ Net Exports (Imports)

The scenarios which are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States are as follows:

The value produced doings your own laundry.

The costs of overfishing and other overly intensive uses of resources The leisure time enjoyed by households

When a U.S. company purchases and imports wood from Brazil to use to build new houses within the United States, this purchase increases the investment component of GDP while also decreases net exports by the same amount. Therefore, the purchase of wood from Brazil causes no change in US GDP.