Marla is an architect who is designing a home for Charles. Charles is paying Marla $150 per hour to design his new home. When Charles and Marla get married, Marla continues to work on designing the home, but she no longer charges Charles for her work. As a result, GDP ________ because ________.

Question

Quizplus · Accepted Answer

GDP falls because Marla's architectural design services are no longer being bought by Charles once they're married, but she is still providing them. GDP measures the value of goods and services purchased in the economy, and if Marla's services are not being bought, then they are not contributing to GDP. However, her work does not go into the underground economy or become less valuable just because she is no longer charging Charles for it. Similarly, there is no evidence to suggest that Marla becomes more productive once she is married.

Marla Is an Architect Who Is Designing a Home for Charles