Answer to Question #235570 in Macroeconomics for Ross

Question

In recent decades, women have worked more hours in paid jobs and fewer hours in unpaid housework.
a. How would this increase in work hours affect GDP?
b. Explain why this increase in measured GDP will overstate the true increase in output. Also explain how a set of augmented national accounts which includes home production would treat this change from nonmarket work to market work.

Answer 1

Solution:

a.). The increase in work hours will lead to an increase in GDP. This is because it will increase the productivity per worker, which will, in turn, spur economic growth and increase the GDP levels.

 

b.). The increase in measured GDP will overstate the true increase in output since GDP will not able to account for the labor hours increased.

National accounts such as home production separate non-market work and market work by measuring the value it adds to the GDP.