If a Parent Spends 2 Hours Each Weekday Transporting His

question 46

Multiple Choice

If a parent spends 2 hours each weekday transporting his or her children to school,this activity

• A)is not included in GDP because it is not productive.
• B)could be included in GDP if the parent reports this activity in his or her income taxes.
• C)is not included in GDP because it does not involve a market transaction.
• D)is included in GDP because statisticians know that this activity has to take place.
• E)is included in GDP if the school system does not provide transportation for these children.

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Definitions:

Moral Hazard

The situation where one party to an agreement can take on risk because they know the other party will bear the cost of that risk.

Safer Cars

Vehicles designed with advanced safety features and technologies to protect passengers during accidents.

Texting

The act of sending and receiving written messages through electronic devices, primarily mobile phones.

Adverse Selection

A situation in markets where buyers or sellers have information that the other party does not, leading to suboptimal market outcomes.