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18 June, 15:04

Suppose Gerald works for Lola as a production assistant. Gerald and Lola fall in love, get married and have children. Gerald stops working for Lola in order to care for the children. What will be the effect of this scenario on GDP?

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  1. 18 June, 17:58
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    The GDP will decrease.

    Explanation:

    The GDP of an economy includes the value of final goods and services produced in the economy within a given period. It does not include the value of the underground economy, intermediate goods and home production of goods and services.

    When Gerald was working as production assistant the value of his production was included in the GDP. When he stops working to care for his children, he is not making any income. The value of taking care of children will not be included in the GDP as it does not involves any economic transaction. So this will cause the GDP to decrease.
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Home » Business » Suppose Gerald works for Lola as a production assistant. Gerald and Lola fall in love, get married and have children. Gerald stops working for Lola in order to care for the children. What will be the effect of this scenario on GDP?
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