Economists often examine GNP to estimate changes in the well being of people. If one only studied GNP, which of the following would lead one to underestimate the true increases in peoples' well being?

Question

Economists often examine GNP to estimate changes in the well being of people. If one only studied GNP, which of the following would lead  one to underestimate the true increases in peoples' well being?

Quizplus · Accepted Answer

GNP measures the total market value of all goods and services produced by a country's economy. It does not account for production that does not enter the market, such as goods and services produced and consumed within the same household. Therefore, if there is an increase in home production (e.g., cooking, childcare), it would not be captured by GNP, leading to an underestimation of the true increase in people's well-being.

Economists Often Examine GNP to Estimate Changes in the Well