Rhonda sells a house she has owned for 15 years and starts living in a rented apartment.To make it more marketable,she buys carpeting that she has professionally installed and buys wallpaper that her daughter hangs.Which items would be included in this year's gross domestic product (GDP)?

Question

Quizplus · Accepted Answer

Only the purchase price for the carpet and wallpaper and installation fee for the carpet would be included in this year's GDP. The sale price of the house is not included as it is considered a transaction of an existing asset. The cost of transporting furniture is considered a cost of moving and not a production of goods and services to add to GDP. The opportunity cost of Rhonda's daughter's time and Rhonda's own time are not included as they are not transactions of goods and services in the marketplace.

Rhonda Sells a House She Has Owned for 15 Years