Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

The domestic services women perform at home are not paid for. Since money is not being used here and is not registered as part of economic activity, this results in :

Options:

Over estimation of GDP

Under estimation of GDP

Exact estimation of GDP

Economic estimation of GDP

Correct Answer:

Under estimation of GDP

Explanation:

The correct answer is option (2) : Under estimation of GDP

These unpaid domestic services, often referred to as "unpaid work, " are not accounted for in the Gross Domestic Product (GDP) calculation. Since GDP measures the total economic output of a country, the exclusion of such activities leads to an underestimation of the actual economic activity occurring in the country.