Question

Question 12 Not yet answered Points out of 1.00 P Flag question If an artisan sells handmade jewelry at a craft fair Select one: O a. and reports the income earned to the Internal Revenue Service, GDP is overstated. O b. and reports the income earned to the Internal Revenue Service, GDP is understated. c. and does not report the income earned to the Internal Revenue Service, GDP is overstated. O O d. and does not report the income earned to the Internal Revenue Service, GDP is understated.

Answer 1

Selling of handmade jewelry comes under GDP calculation.

So, Stating the income earned from it to the Internal Revenue service is fine as it neither overstates nor understates.

But when the income earned from it is not reported to the Internal Revenue service will lead to understatement of GDP. As a product is produced and there is no record of it with the Internal Revenue service hence GDP issued by them will be understated as the amount of sales of this handmade jewelry is not added into that.

So, When the income is not reported to the Internal Revenue Service, GDP is understated.

Hence, Option d. is correct