RC 1

The Gross Domestic Product (GDP), which

measures the dollar value of finished goods and

services produced by an economy during a given

period, serves as the chief indicator of the

economic well-being of the United States. The GDP

assumes that the economic significance of goods

and services lies solely in their price, and that these

goods and services add to the national well-being,

not because of any intrinsic value they may

possess, but simply because they were produced

and bought. Additionally, only those goods and

services involved in monetary transactions are

included in the GDP. Thus, the GDP ignores the

economic utility of such things as a clean

environment and cohesive families and

communities. It is therefore not merely coincidental,

since national policies in capitalist and noncapitalist

countries alike are dependent on indicators such as

the GDP, that both the environment and the social

structure have been eroded in recent decades. Not

only does the GDP mask this erosion, it can actually

portray it as an economic gain: an oil spill off a

coastal region "adds" to the GDP because it

generates commercial activity. In short, the nation's

central measure of economic well-being works like a

calculating machine that adds but cannot subtract.

1. The primary purpose of the passage is to

(A) identify ways in which the GDP could be modifi ed

so that it would serve as a more accurate

indicator of the economic well-being of the

United States

(B) suggest that the GDP, in spite of certain

shortcomings, is still the most reliable indicator

of the economic well-being of the United States

(C) examine crucial shortcomings of the GDP as an

indicator of the economic well-being of the

United States

(D) argue that the growth of the United States

economy in recent decades has diminished the

effectiveness of the GDP as an indicator of the

nation's economic well-being

(E) discuss how the GDP came to be used as the

primary indicator of the economic well-being of

the United States

2. Which of the following best describes the function of

the second sentence of the passage in the context of

the passage as a whole?

(A) It describes an assumption about the GDP that

is defended in the course of the passage.

(B) It contributes to a discussion of the origins of

the GDP.

(C) It clarifi es a common misconception about the

use of the GDP.

(D) It identifi es a major fl aw in the GDP.

(E) It suggests a revision to the method of

calculating the GDP.