Comparisons of GDP between developed and underdeveloped countries are often misl

Question

Comparisons of GDP between developed and underdeveloped countries are often misleading because underdeveloped countries produce

a. a greater share of their total production in the household sector, which understates their GDP relative to developed countries.

b. a smaller share of their total production in the household sector, which understates their GDP relative to developed countries.

c. a greater share of their total production in the household sector, which overstates their GDP relative to developed countries.

d. a smaller share of their total production in the household sector, which overstates their GDP relative to developed countries.

Explanation / Answer

The correct answer is option A: A greater share of their total production in the household sector, which understates their GDP relative to developed countries.

In underdeveloped countries majority of production comes from the household sector, which actually understates their GDP with respect to developed coutries which is not true in the case of Developed countries, since production is majorly done by firms and only a little amount of income is generated from households. Hence option A is true

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.