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Which statement is correct? Select one alternative: OGDP will decrease if Linda takes care of her son at home instead of sending him to day care
Which statement is correct? Select one alternative: OGDP will decrease if Linda takes care of her son at home instead of sending him to day care. Capital income is not part of GDP. Income per worker is lower than income per capita. An increase in import increases GDP
Expert Solution
First statement is wrong,
- GDP will not decrease, if Linda takes care of her son at home instead of sending him to a day care. Because the imputed value of care services is not included in the GDP. It may lead to underestimation of GDP but not a decrease
second statement is right,
- capital income like rise in the value of assets and investments is not part of GDP because there is no actual production of goods or services.
third statement is wrong,
- Because income per worker is the same concept as income per capita, which means The level of income divided by total population
fourth statement is wrong,
- An increase in import would reduce the GDP because it will lead to outflow of income to foreign countries to pay for the import bill.
- However an increase in export would increase the GDP
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