Question

Consider whether each of the following changes or events cause measured GDP rise or fall? Explain

1) Suppose a woman marries her butler. After they married, she continues to support him as before (but as a husband).

2) A new environmental laws was passed to prohibit Örms from emitting large amount of pollution during production

Answer 1

When women marry her butler, if we assume that butler no longer works for that family, then GDP will fall. Reason for the fall is that a butler will no longer receive the salary, and that category will not exist any more in GDP calculation since GDP calculates total value of all goods and services. Butler services no longer exist so the end result will fall of GDP.
After they are married, he will continue to wait on her but that service will not be part of GDP, since not all goods and services are part of GDP. GDP does not measure household chores so his services are not contributing to the economy when we look from the perspective of GDP.