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    Official measure of GDP

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    Explain what happens to the official measure of GDP in each of the following situations.

    a. Air quality improves significantly throughput the United States, but there are no effects on aggregate production or on market prices of final goods and services.
    b. The U.S. government spends considerably less on antipollution efforts this year than it did in recent years.
    c. The quality of cancer treatments increases, so patients undergo fewer treatments, which hospitals continue to provide at the same price as before.

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    a) There will be no effect on GDP as GDP involves measurement of final goods ...

    Solution Summary

    The solution explains the official measure of GDP.