Gross domestic product (GDP) is an inferior measure of a nation\'s product becau

Question

Gross domestic product (GDP) is an inferior measure of a nation's product because: A) no allowance is made for the fact that people have to pay taxes on their income. B) no allowance is made for the fact that people save some of their income. C) no allowance is made for the fact that some of the product is added to the capital stock. D) no allowance is made for international trade. E) no allowance is made for the fact that some of the product must be used to replace investments that become obsolete.

Explanation / Answer

E) no allowance is made for the fact that some of the product must be used to replace investments that become obsolete.

This is also know as depreciation and it is not considered in GDP

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