Scenario: Sarah takes care of her son instead of sending him to a day care that charges $12,000 annually.
-Refer to the scenario above.Which of the following will happen if Sarah opens a day care and takes care of five children,in addition to her son,charging $12,000 per year for each child?
A) The country's trade surplus will increase by $12,000.
B) The country's GDP will decrease by $12,000.
C) The country's GDP will increase by $60,000.
D) The country's trade deficit will increase by $2,400.

Question

Quizplus · Accepted Answer

By opening a day care and taking care of five additional children, Sarah will be earning $12,000 per child, and since she will be taking care of five children, she will earn a total of $60,000, which will add to the country's GDP. Therefore, the correct option is C. Option A is incorrect because a country's trade surplus does not increase or decrease due to a day care business. Option B is incorrect because the country's GDP will increase due to the income generated by Sarah's day care business. Option D is incorrect because a day care business does not have any impact on a country's trade deficit.

Scenario: Sarah Takes Care of Her Son Instead of Sending