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. Funds spent by city governments to renovate their buildings The costs of air and water pollution The value produced by doing your own laundry 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 component of GDP while also net exports by the same amount. Therefore, the purchase of wood from Brazil causes in US GDP.

Answer 1

The costs of air and water pollution

The value produced by doing your own laundry

The leisure time enjoyed by households

Business spending

decreasing

no change

Step-by-step explanation:

Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year

GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export

Net export = exports – imports

When exports exceed import there is a trade deficit and when import exceeds import, there is a trade surplus.

Items not included in the calculation off GDP includes:

1. services rendered to oneself

2. Activities not reported to the government

3. illegal activities

4. sale or purchase of used products

5. sale or purchase of intermediate products

6. pollution

The purchase of the wood from Brazil increase investment spending by businesses and also increases imports. Import is a negative function of net export so net export would decrease.

The increase in investment spending by the business and the decrease in net export would offset each other and there would be no change in GDP