Question

Suppose a house is built and sold in the year 2000. If the house is resold in the year​ 2009, is the value of the house included in Gross Domestic ProductLOADING... ​(GDP) for​ 2009?
A. No. GDP for 2009 includes only production that occurs during 2009.
B. Yes. The value of the house is included in Gross Private Domestic Investment for 2009.
C. Yes. The value of the house is included in Personal Consumption Expenditures for 2009.
D. No. GDP for 2009 includes only the market value of final goods. A house resold in 2009 is an intermediate good.

Answer 1

Answer:

The answer is A. No GDP for 2009 includes only production that occurs during 2009

Explanation:

Gross Domestic Product otherwise refereed to ad GDP is the monetary value of goods produced in a country within a period of time usually a year.

The house would have been included in GDP in the year of construction which is year 2000, It will amount to double counting if we include the resale value again in year 2009 GDP.

We must note as a rule that the amount included in GDP is the value of final product or value added.

The value that can be recognized in subsequent years after construction will be the contribution of the house to production as evidenced by the rentals from the house or the imputed rentals.