As households eat out more, purchase more prepared foods at the grocery store, hire out child care services that they once performed themselves, what is likely to happen to the value of GDP?
A) The value of GDP is likely to decrease.
B) The value of GDP is likely to increase.
C) GDP will not be affected because there is no net increase in the output of goods and services.
D) GDP will not be affected because there is no net increase in the output of goods and services but GDI will increase.

Question

Quizplus · Accepted Answer

When households buy more prepared foods and eat out more, this represents an increase in consumption, which is a component of GDP. Similarly, when households hire out services that they once performed themselves, this represents an increase in investment, which is also a component of GDP. Therefore, as households engage in these activities more, the value of GDP is likely to increase.

As Households Eat Out More, Purchase More Prepared Foods at the Grocery