Problems and Applications Q10 Goods and services that are not sold in markets, such as food produced and consumed at home, are generally not included in GDP. True or False: As a result, you would expect that GDP per person in India and the United States will differ by more than their actual comparative economic well-being. (A) True (B) False

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Ivan Houston

14 June, 00:35

Problems and Applications Q10 Goods and services that are not sold in markets, such as food produced and consumed at home, are generally not included in GDP. True or False: As a result, you would expect that GDP per person in India and the United States will differ by more than their actual comparative economic well-being. (A) True (B) False

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Krueger · Answer 1

Answer: True. Goods and services that are not sold in markets, such as food produced and consumed at home, are generally not included in GDP.

A. True. GDP per person in India and the United States will differ by more than their actual comparative economic well-being

Explanation: GDP is the sum of the market value of all final goods and services produced in an economy during an accounting year, measured in current prices. GDP is not the real representation of the country's output value because some of the goods and services that are produced and consumed within the households is not included in the GDP of a country.

It is common for less developed economies like India to produce and consume a lot more of their goods at home than in a marketplace, as a result, lower GDP. In the United States, most goods are sold in a marketplace, hence, they have higher GDP per capita figures. Therefore, on paper, the GDP of the two countries will lead to misleading comparison of their economic well being.