Which of the Following Is the Most Likely Side Effect

question 95

Multiple Choice

Which of the following is the most likely side effect of an increase in the relative size of the underground economy with the passage of time?

• A) The growth rate of real GDP will tend to understate the growth rate of total output.
• B) The growth rate of real GDP will tend to overstate the growth rate of total output.
• C) The GDP deflator will tend to overstate any increase in inflation.
• D) The GDP deflator will tend to understate any increase in inflation.

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Definitions:

Marginal Product Curve

A graphical representation showing how the addition of a single unit of resource alters the total output of a good or service.

Total Product

The total output of goods and services produced by a firm or industry over a specific period.

Marginal Product

The additional output that is produced by using one more unit of a particular input, holding all other inputs constant.

Points A and B

Usually refers to specific positions or locations within a graph or model used in economic analysis and decision-making.