Suppose the value of your home increases from $100,000 to $125,000. If you continue to live in your home, the increase in its value:

A) adds nothing to GDP.

B) increases GDP by $25,000.

C) increases GDP by $100,000.

D) increases GDP by $125,000.

Question

Elle Sexton

Business

4 April, 13:35

Suppose the value of your home increases from $100,000 to $125,000. If you continue to live in your home, the increase in its value:

A) adds nothing to GDP.

B) increases GDP by $25,000.

C) increases GDP by $100,000.

D) increases GDP by $125,000.

+4

Answers (1)

Know the Answer?

Waylon Blair · Answer 1

The correct answer is option A.

Explanation:

The value of a house was $100,000.

It increased to $125,00.

It will have no effect on the GDP if the person owning it continues to live in it.

The GDP of an economy measures the value of final goods and services produced in an economy in a year. This increase in the value of a house will not affect GDP as no final good or service is being produced.

The value of second-hand goods is not included in GDP.

Suppose the value of your home increases from $100,000 to $125,000. If you continue to live in your home, the increase in its value:A) adds nothing to GDP.B) increases GDP by $25,000.C) increases GDP by $100,000.D) increases GDP by $125,000.

Suppose the value of your home increases from $100,000 to $125,000. If you continue to live in your home, the increase in its value:

A) adds nothing to GDP.

B) increases GDP by $25,000.

C) increases GDP by $100,000.

D) increases GDP by $125,000.