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Real GDP Is Not a Perfect Measure of Social Welfare

Question 52

Multiple Choice

Real GDP is not a perfect measure of social welfare because


A) GDP includes output produced in both the market and in the home.
B) real GDP may be increasing only because of price increase, not increases in output.
C) GDP accounting rules do not adjust for production that causes negative externalities.
D) GDP accounting rules lead to different weights being placed on goods produced in the government sector compared to the private sector.

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