If Deanna decides to cut her son's hair herself instead of having a hairdresser do it, what is the impact on GDP?

Question

Quizplus · Accepted Answer

GDP measures the market value of final goods and services produced within a country's borders during a given period of time. When Deanna cuts her son's hair herself, there is no market transaction taking place, and therefore no contribution to GDP. In contrast, if she were to hire a hairdresser, there would be a market transaction and the hairdresser's services would be included in GDP. By choosing to cut her son's hair herself instead of hiring a hairdresser, Deanna is reducing the amount of economic activity in the hairdressing industry, and therefore reducing the overall level of GDP.

If Deanna Decides to Cut Her Son's Hair Herself Instead