Question

Household​ production, such as baking bread at​ home, is not included in GDP because it

A. does not add anything of value to GDP.
B. has lower quality than the bread in the store.
C. is not really production.
D. does not involve a market transaction.
E. has better quality than the bread in the store.

Answer 1

The correct answer is option D.

Step-by-step explanation:

GDP can be defined as a measure to calculate the economic growth of a nation. It includes the production of final goods and services in the geographical boundaries of a nation.

It does not include home production of goods and services, this is because such goods and services do not involve a market transaction. For instance, if a person is baking bread at home he/she is not being paid for it by anyone.