GDP Understates the Amount of Economic Production in the United

question 17

Multiple Choice

GDP understates the amount of economic production in the United States because it excludes:

• A) Spending for the U.S. military
• B) Transfer payments
• C) Purchases of stocks and bonds
• D) Work performed by people for their own benefit

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Definitions:

Interstate Commerce

Refers to any business or trade activity that crosses state lines, regulated by the federal government in the United States.

Federal Income Tax

A fiscal duty assessed by the federal authority on the annual revenues of people, firms, trusts, and assorted legal entities.

FICA Rate

The total percentage of Social Security and Medicare taxes that must be paid by both employees and employers under the Federal Insurance Contributions Act.

Workers' Compensation Insurance

Insurance that provides wage replacement and medical benefits to employees injured in the course of employment.