Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
GDP includes all legal economic activities, including household labor.
B
GDP does not account for the value of unpaid household labor, which contributes to economic well-being.
C
GDP measures the production of goods and services exclusively in the formal market.
D
GDP is an accurate reflection of a nation's standard of living because it measures all economic activity.
Understanding the Answer
Let's break down why this is correct
Answer
Gross Domestic Product, or GDP, measures the total economic activity in a country, but it does not include household production, which is valuable work done at home. For example, when a parent takes care of their children or cooks meals, this labor contributes to the well-being of the family but is not counted in GDP. This means that GDP can underestimate the true economic value of a society, as it ignores important activities that support households and communities. As a result, relying solely on GDP can give a misleading picture of a country's overall economic health and the well-being of its citizens. In short, while GDP is useful, it has limitations because it overlooks significant contributions made outside the formal economy.
Detailed Explanation
GDP does not include unpaid work done at home, like cooking or cleaning. Other options are incorrect because Some might think GDP counts all work, but it doesn't include unpaid household tasks; This option suggests GDP only looks at formal jobs, but it misses unpaid work too.
Key Concepts
value of household labor
economic indicators
Topic
GDP Limitations and Household Production
Difficulty
medium level question
Cognitive Level
understand
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