Question Details

When calculating GDP, underground economic activity is 


1) Which of the following is NOT included in real GDP?
A) production of services, such as the services of doctors
B) production of goods that last more than one year, such as television sets
C) production of goods that do not last more than one year, such as gasoline
D) production in the home
2) If a larger fraction of the adult population is working in the marketplace, household production
A) counted in real GDP increases.
B) not counted in real GDP increases.
C) counted in real GDP decreases.
D) not counted in real GDP decreases.

3) 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.
A) i only
B) ii only
C) Neither i nor ii
D) Both i and ii.
4) When calculating GDP, underground economic activity is 
A) the production of goods and services in the home.
B) that portion of the time when we are enjoying leisure activities and not producing
marketable goods.
C) the part of the economy purposely hidden.
D) an aspect of the quality of life, such as health and life expectancy.

5) In part, the underground economy exists because of the
A) irrationality of people who choose to evade taxes.
B) high tax rates.
C) ease of entry into the occupations that compose it.
D) greater efficiency of barter transactions compared to monetary ones.



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