When people smoke cigarettes, their friends and family members may become sick.This affects GDP by
A)reducing GDP by the amount of medical care needed.
B)reducing GDP by the cost of the cigarettes purchased.
C)increasing GDP by the cost of the medical care and the cost of the cigarettes purchased.
D)decreasing GDP by the cost of the medical care and increasing GDP by the cost of the cigarettes purchased.

Question

Quizplus · Accepted Answer

The cost of medical care and the cost of cigarettes purchased both contribute to GDP. Medical expenses increase GDP because they are considered part of healthcare spending, a component of GDP. Similarly, the purchase of cigarettes is a part of consumer spending, which also contributes to GDP. Therefore, both the medical care costs due to smoking-related illnesses and the cost of purchasing cigarettes increase GDP.

When People Smoke Cigarettes, Their Friends and Family Members May