Question 1
GDP understates the value of output produced by an economy because it
◦ includes environmental degradation caused by increased output production.
◦ excludes value added from the underground economy, such as tips taken "under the table."
◦ includes transactions that do not take place in organized markets, such as home-cooked meals.
◦ excludes the value of the wages and fringe benefits of government employees.
Question 2
Per capita gross national income (GNI) increases when
◦ GNI and the population increase at the same rate.
◦ GNI does not change and the population increases.
◦ GNI and the population decrease at the same rate.
◦ GNI increases and the population does not change.