Chapter 15, Question 14 According to the Bureau of Economic Analysis, one of the major limitations of national income accounts is that it ignores the importance of nonmarket production in the household, for example, meal preparation, cleaning, laundry, and childcare. Therefore, when these activities are ignored in the market, the value of production is overstated due to the decline in nonmarket production. Another limitation is the gray market and illegal activities, such as production and distribution of marijuana or gambling, which can be significant sources of support in economies but are not included. Government services that are not subject to a market test will be worth less than they cost, even though cost is used as a measure of value. Another misleading image of the representative resident’s well being is the unequal distribution of per capita income. In order to provide a better image of the economy, the NIPA has to adjust its account for various environmental considerations to keep our economies on a sustainable development path, replace conventional macroeconomic indicators with measures of welfare, and guarantee that a wide range of environmental and social impacts will be taken into accounts as we make decisions about economic growth or development towards consideration of other forms of well being.

Chapter 25, Question 7
Free trade between countries does not exist; however it does exist among the 50 states of the United States because the U.S. Constitution forbids tariffs between all states and places them under the Congress to regulate interstate commerce. Also the 50 states are subject to the same federal laws about banking, labor, and the environment, and they use the U.S. dollar as the legal medium of exchange and none can devalue its currency against the other states. However, countries establish trade policies that serve their own best