GDP Understates the Value of Output Produced by an Economy

question 108

Multiple Choice

GDP understates the value of output produced by an economy because it

• A) includes transactions that do not take place in organized markets, such as home-cooked meals.
• B) excludes value added from the underground economy, such as tips taken "under the table."
• C) includes environmental degradation caused by increased output production.
• D) excludes the value of the wages and benefits of government employees.

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Definitions:

Eurobonds

International bonds that are denominated in a currency not native to the country where it is issued, allowing investors and issuers to access global capital markets.

Foreign Bonds

Bonds issued in a domestic market by a foreign entity, in the currency of the domestic market, as a way for the issuer to raise capital.

Foreign Exchange Market

The Foreign Exchange Market is a global decentralized or over-the-counter market for trading currencies, determining the foreign exchange rates for every currency.

Depreciates

Refers to the decrease in value of an asset over time due to wear and tear, obsolescence, or age.