Which of the Following Is a Shortcoming of GDP

question 116

Multiple Choice

Which of the following is a shortcoming of GDP?

• A) GDP excludes changes in inventories.
• B) GDP includes an estimate of illegal transactions.
• C) GDP excludes nonmarket transactions.
• D) GDP excludes business investment spending.

---

Definitions:

Productive Efficiency

A state where an economy or firm produces goods or services at the lowest possible cost, using resources in the best possible manner without waste.

Managerial Incentives

Incentives designed to motivate managers to make decisions that align with the owner's or shareholders' interests.

Pure Monopolist

A single supplier in a market that controls all the goods or services, with no close substitutes and high barriers to entry.

Socially Optimal

A condition or point at which the social welfare is maximized, considering the benefits and costs to society as a whole.