One Shortcoming of Using GDP as a Central Variable for Policy

question 182

Multiple Choice

One shortcoming of using GDP as a central variable for policy objectives is that it fails to measure

• A) growth in productivity.
• B) increases in the quantity of goods.
• C) non-market production.
• D) changes in the price level.
• E) increases in the number of imported goods.

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Definitions:

Cross-Price Elasticity

A measure of how the demand for one good responds to a change in the price of another good.

Income Elasticity

A measure of how much the demand for a good changes in response to a change in consumer income.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given period of time.

Cross-Price Elasticity

The responsiveness level of the quantity of a product needed when there's a fluctuation in the price of another product.