One Major Critique of Relying on the GDP to Measure

question 21

Multiple Choice

One major critique of relying on the GDP to measure economic success is that:

• A) it fails to capture a decline in well-being, as measured by sales of such products as alarms in our homes.
• B) it is only able to measure economic activity in the manufacturing sector and does not include the rapidly growing service sector.
• C) the statistic fails to tell us how the U.S. economy compares to the economies of other nations.
• D) it relies too heavily on Wall Street activity.
• E) the government frequently changes the formula for computing the GDP.

---

Definitions:

Optimal Order Quantity

The most efficient amount of stock to order that minimizes total inventory costs, including ordering and holding costs.

Ordering Costs

Expenses associated with making an order for goods, including costs for processing, shipping, and receiving materials.

Lot Size

The number of units of a product that are manufactured or delivered in one batch, affecting inventory and production strategies.

Economic Production Lot Size

The optimal quantity of goods to produce in a single batch that minimizes the total production and holding costs.