GDP Is Not a Perfect Measure of Welfare Because It

question 15

Multiple Choice

GDP is not a perfect measure of welfare because it

• A) treats a dollar spent on candy bars the same as a dollar spent on education
• B) treats a dollar spent on exports the same as a dollar spent on imports
• C) double counts the value of leisure time
• D) double counts depreciation
• E) counts illegal activities in the underground economy

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Definitions:

Production Decrease

A reduction in the output of goods and services produced by an economy or firm, often leading to negative economic consequences.

Real GDP

Measures the value of all final goods and services produced within a country's borders in a specific time period, adjusted for inflation.

Aggregate Supply

The aggregate amount of products and services generated inside an economy, measured at a specific overall price level during a defined timeframe.

Technological Progress

The overall process of invention, innovation, and diffusion of technology or processes, which typically contributes to economic growth.