Comparisons of GDP Between Developed and Underdeveloped Countries Are Often

question 26

Multiple Choice

Comparisons of GDP between developed and underdeveloped countries are often misleading because underdeveloped countries produce

• A) a greater share of their total production in the household sector, which understates their GDP relative to developed countries.
• B) a smaller share of their total production in the household sector, which understates their GDP relative to developed countries.
• C) a greater share of their total production in the household sector, which overstates their GDP relative to developed countries.
• D) a smaller share of their total production in the household sector, which overstates their GDP relative to developed countries.

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Definitions:

Dividends in Arrears

Outstanding dividend payments that have not been paid to preferred shareholders.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with dividend payment preferences.

Redemption Value

The price at which an issuer can repurchase a bond or debt instrument before it reaches its due date.

Par Value

An arbitrary value that is placed on each share of stock. Par value represents legal capital and not market value.