Reported GDP increases when,in fact,total production is unchanged when I. there is a shift from household production to market production.
II) a previously illegal activity is legalized.

Question

Quizplus · Accepted Answer

GDP increases in both cases because GDP measures market transactions. Shifting household production to market production and legalizing previously illegal activities both increase market transactions, thus increasing reported GDP.

Reported GDP Increases When,in Fact,total Production Is Unchanged When I