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If a Homeowner Sells a Kitchen Table and Chairs That

Question 78

Multiple Choice

If a homeowner sells a kitchen table and chairs that she no longer wants to use and does not report the income earned from the sale to the Internal Revenue Service, the value of GDP is


A) understated because this transaction took place in the underground economy.
B) overstated because the sale of the furniture is counted twice in GDP calculations.
C) unaffected by this transaction because the table and chairs were already counted in GDP as final goods when the homeowner bought them new.
D) understated because this purchase was a nonmarket transaction.

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