A painter pays $500 for paint he uses to repaint a house.He then presents a bill for $1200 that covers his time and expenses to the homeowner.How much do these transactions add to GDP?

Question

Quizplus · Accepted Answer

The transactions only add $1200 to GDP as that is the value of the final goods/services produced (the painter's time and expenses to repaint the house). The $500 spent on paint is considered an intermediate good and is not factored into GDP calculations.

A Painter Pays $500 for Paint He Uses to Repaint