Martin purchases 500 shares of stock in ABC Company at a price of $10 per share. He pays his stockbroker a commission of $50 for helping with the transaction. How much does GDP change as a result of Martin's commission payment?
A) There is no change in GDP.
B) GDP rises by $5,000.
C) GDP rises by $5,050.
D) GDP rises by $50.

Question

Quizplus · Accepted Answer

GDP rises by the amount of the commission ($50) because it is a service transaction that contributes to the country's economic activity. The purchase of stocks itself does not affect GDP, as it is merely a transfer of ownership.

Martin Purchases 500 Shares of Stock in ABC Company at a Price