Without plagiarizing, explain each one of the GDP.

Nonmarket Activities I Certain productive activities do not take place in any marketthe services of stay-at-home parents, for example, and the labor of carpenters who repair their own homes. Such activities do not show up in GDP because government accountants receive data only on economic transactions involving market activitiesthat is, transactions in which output or resources are traded for money. Consequently, GDP understates a nation's total output because it does not count unpaid work. There is one exception: The portion of farmers' output that farmers consume themselves is estimated and included in GDP. Leisure and Psychic Income The average workweek (excluding overtime) in the United States has declined since the beginning of the l9OOSfrom about 53 hours to about 35 hours Moreover, workers today have more paid vacation holidays, and leave time. This increase in leisure time has clearly had a positive effect on overall well- being. But our system of national income accounting understates well-being by ignoring leisure's value. Nor does the system accommodate the satisfactionthe \"psychic income\"that many people derive from their work. Improved Product Quality Because GDP is quantitative rather than qualitative, it fails to capture the full value of improvements in product quality. For example, a $500 cell phone purchased today is of much higher quality than a cell phone that cost $500 a decade ago. Quality improvement obviously has a great effect on economic well-being, an effect that goes above and beyond any increase in the quantity of output. Although the BEA adjusts GDP for the quality improvements of selected items, the vast majority of quality improvements are not yet reected in GDP. (See this chapter's it Last Word for more on this subject.) The Underground Economy Embedded in our economy is a ourishing, productive underground sector. Some of the people who conduct business there are bookies, smugglers, \"fences\" of stolen goods, and drug dealers. They have good reason to conceal their incomes. Most participants in the underground economy, however, engage in perfectly legal activities but choose illegally not to report their full incomes to the Internal Revenue Service (IRS). A barista at a coffee shop may report just a portion of the tips received from customers. Storekeepers may report only a portion of their sales receipts. Workers who want to hold onto their unemployment compensation benets may take an \"off-thebooks\" or \"cash-only\" job. A brick mason may agree to rebuild a neighbor's replace in exchange for the neighbor's repairing his boat engine. None of these transactions show up in GDP. '1 Global Perspective 27.2 presents estimates of how big the underground economy was in various countries in 2015. The value of underground transactions in the United States amounted to about 7 percent of recorded U.S. GDP in 2015, which means that US. GDP in 2015 was understated by about $1.3 trillion. GDP and the Environment The growth of GDP is sometimes accompanied by an increase in \"gross domestic by-products,\" including dirty air and polluted water, toxic waste, congestion, and noise. The social costs of the negative byproducts reduce our economic well- being. Because those costs are not deducted from total output, GDP overstates our national well- being. Ironically, when money is spent to clean up pollution and reduce congestion, those expenses are added to GDP! Composition and Distribution of Output The composition of output is undoubtedly important for well-being, but GDP does not tell us whether the currently produced mix of goods and services is enriching or potentially detrimental to society. GDP assigns equal weight to an assault rie and a laptop computer, as long as both sell for the same price. Moreover, GDP reveals nothing about the distribution of output. Does 90 percent of the output go to 10 percent of the households, for example, or is output more evenly distributed? The distribution of output may make a big difference for society's overall well-being. Noneconomic Sources of Well-Being Finally, just as a household's income does not measure its total happiness, a nation's GDP does not measure its total well-being. Many things could make a society better off without necessarily raising GDP: a reduction of crime and Violence, peaceful relations with other countries, people's greater civility toward one another, better understanding between parents and children, or a reduction of drug and alcohol abuse. The Importance of Intermediate Output Because GDP focuses on final output, it ignores all of the business-to-business economic activity that takes place in the economy at earlier stages of production and distribution. That omission is worrisome because many people's jobs and many firms' profitability depend on economic activity at earlier stages. We can get a sense of what is going on at those earlier stages by examining gross output (GO), which sums together the sales values received by firms at every stage of production. As you learned earlier in this chapter, GO is always larger than GDP because GO includes every stage of production while GDP only accounts for the final stage of production. In 2017, GO was $34.4 trillion in the United States while GDP was $19.5 trillion.GO is particularly useful when attempting to gauge the magnitude of business cycle fluctuations. During the 2007-2009 recession, real GDP fell by 4.2 percent, while real GO fell by 8.6 percent. Thus, total economic activity fell by more than twice as much as final output. That substantial difference goes some way toward explaining why employment fell so dramatically during the Great Recession