Answer to Question #50496 in Macroeconomics for Taylor

Question

Which of the following are examples of the limitations of GDP? That is, which of these are not accounted for by the computations of GDP?
A) Highway Repairs done by the government
B) The value of leisure time
C) The import and sale of illegal drugs from South America
D) The value of housing services provided by owner-occupied homes

Answer 1

There are many limitations to using GDP as a way to measure current income and production. Major ones include:
·Changes in quality and the inclusion of new goods
·Leisure/human costs
·Underground economy
·Harmful Side Effects
·Non-Market Production
That's why B, C and D are examples of the limitations of GDP.