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.

Question

Quizplus · Accepted Answer

GDP does not account for non-market production, which includes activities such as household production and volunteer work. These activities may have significant economic value but are not reflected in GDP. Furthermore, GDP measures the value of goods and services produced, but does not necessarily indicate whether there has been an increase in productivity or if there have been changes in the price level. Increases in the quantity of goods and the number of imported goods would be captured by GDP.

One Shortcoming of Using GDP as a Central Variable for Policy