Upon getting a big promotion,Sally decides to buy a house in the neighborhood she grew up in as a child.In fact,the house she buys used to belong to a neighbor of hers,and so she's certain it's in good shape and well worth the $200,000 she pays for it.The only thing Sally needs to do is replace all the gutters for $1,000,which she happily does.How will GDP be affected by Sally's recent purchases?

Question

Quizplus · Accepted Answer

The purchase of an existing house does not count towards GDP as it is not a new production. Only the $1,000 spent on replacing the gutters would count as consumption in GDP.

Upon Getting a Big Promotion,Sally Decides to Buy a House