Which of the following transactions, if it was included in the calculation of GDP, would lead...

Which of the following transactions, if it was included in the calculation of GDP, would lead to an overstated GDP figure?

A) buying a new set of golf clubs

B) the purchase of a special fabric adhesive by a furniture company in California

C) buying asparagus for dinner, even though it is really expensive

D) hiring a babysitter and paying him or her under the table

Expert Solution

Option

B) the purchase of a special fabric adhesive by a furniture company in California

The fabric is used as intermediate good and if it is added to the GDP then it is double counting which overstates the GDP.

GDP is a sum of final goods and services produced in a country within a year.

Buying a new car or buying asparagus for dinner is added to the GDP as these are final goods.

hiring a babysitter and paying him or her under the table is not counted for GDP but it should be so it understates the GDP

Rahul Sunny answered 2 years ago

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