Comparisons of GDP between developed and underdeveloped countries are often misleading because underdeveloped countries produce
A) a greater share of their total production in the household sector, which understates their GDP relative to developed countries.
B) a smaller share of their total production in the household sector, which understates their GDP relative to developed countries.
C) a greater share of their total production in the household sector, which overstates their GDP relative to developed countries.
D) a smaller share of their total production in the household sector, which overstates their GDP relative to developed countries.

Question

Quizplus · Accepted Answer

Underdeveloped countries often produce a greater share of their total production in the household sector, meaning that many goods and services are produced and consumed within the household and not sold in the market. This understates their GDP relative to developed countries, which have a larger share of production in the market sector. Thus, comparisons based solely on GDP can be misleading.

Comparisons of GDP Between Developed and Underdeveloped Countries Are Often