Why Is GDP NOT a Perfect Measure of Welfare

question 31

Multiple Choice

Why is GDP NOT a perfect measure of welfare?  

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

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Definitions:

Simple Rate Of Return

A metric used to evaluate the gain or loss on an investment relative to the amount invested, expressed as a percentage.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity level to meet short-term obligations and operations.

Annual Net Operating Cash Inflows

The total amount of money that flows into a business from its operational activities, after all operational expenses have been paid, over a one-year period.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity of a business.