Choose the best answer. Real GDP tends to overstate our economic well-being by including:
A) expenditures on crime prevention.
B) payments for cleaning up the environment.
C) repairs to structures destroyed by storms.
D) expenditures on crime prevention, payments for cleaning up the environment, and repairs to structures destroyed by storms.

Question

Quizplus · Accepted Answer

All of these expenditures are included in real GDP, but they are not necessarily indicative of our economic well-being. For example, expenditures on crime prevention may be necessary, but they do not necessarily represent a positive contribution to our economy. Similarly, payments for cleaning up the environment and repairs to structures destroyed by storms are important, but they do not necessarily reflect an increase in economic well-being. Therefore, real GDP tends to overstate our economic well-being by including these expenditures.

Choose the Best Answer