Consider two items that might be included in GDP: (1)The estimated rental value of owner-occupied housing;and (2)purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

Question

Quizplus · Accepted Answer

The estimated rental value of owner-occupied housing, which is item (1), is not considered as an "actual" expenditure but rather an imputed value. Therefore, it is not included as a part of consumption expenditure. Instead, it is included in the investment component of GDP since it represents the return on investment in the housing property. On the other hand, item (2), which is the purchase of newly-constructed homes, is counted as a part of investment expenditure. It is not included in the consumption component since it is treated as a form of investment in the economy. Hence, the correct answer is B.

Consider Two Items That Might Be Included in GDP: (1)The