[Related to the Apply the Concept on page 263] An article in the Wall Street Journal noted that many economists
believe that GDP data for India are unreliable because
“most enterprises are tiny and unregistered, and most
workers are employed off the books. The government’s
infrequent surveys represent only a best guess of the value
being added in back-alley workshops, outdoor markets
and other cash-based corners of the economy.”
a. What does the article mean by working “off the
books”? Why might it be difficult for the government
to measure the production of small, cash-based firms?
b. Why would the problems listed make it difficult for
the Indian government to accurately measure GDP?
c. What problems can be caused for a government or
for businesses in a country if the government cannot
accurately measure GDP?
Source: Raymond Zhong, “On Close Inspection, India’s Sharp
Growth Picture Gets Fuzzy,” Wall Street Journal, May 1, 2016.