Question

plz help with this homework, plz don't copy answers that were answered before. Thank you and write in text and not image since its hard to read from.

GDP is used by economists to measure a nation's total production, so clearly they don't want the calculation of GDP to miss any significant amounts of production that take place.

1. What are some production items that the typical measure of GDP might miss? Why?
2. Should these missed items concern us, and, if so, what should we do about it?
3. Scenario: You have a garden in your backyard/window flower box. Provide examples of when the items you grow should or should not be counted in the GDP calculation? Is it possible to have a situation where both occur (count and not be counted)?

Answer 1

1)

There are several items that affect the GDP but these are not included in the calculation of GDP. Thus, GDP might be underestimated.

Production items that are not traded are not included in GDP measurements. For example, Lawn mowed down by the owner of the house, house cleaning by the housewives are not included in measurement of GDP as these services are not traded in the market.

2)

Obviously, these missed items do not get reflected in GDP, so there is an underestimation of GDP. These missed items are a matter of concern for us. These items must be traded in the market to include in GDP measurements otherwise it would not be possible to calculate and include these items in GDP measurements.

3)

Here, both scenarios might arise, when either these items would be included in GDP calculation or not. If these grown items are sold out in the market, then these items shall be included in GDP measurements. On the other side, if these are not traded in market and consumed by the owner of the house, these would not be a part of GDP measurements.