When Mr.Wilson worked full time,he paid a cleaning service to have his house cleaned twice a month.Now that he is retired,Mr.Wilson does his own cleaning.What is the effect on GDP?
A) GDP is unaffected by this change.
B) GDP falls as a result of this change.
C) GDP at first rises but then falls.
D) GDP rises as a result of this change.

Question

Quizplus · Accepted Answer

When Mr. Wilson paid for the cleaning service, it was included in GDP as a consumption expenditure. However, now that he is doing the cleaning himself, there is no payment involved and therefore no GDP contribution. As a result, GDP falls as a result of this change.

When MrWilson Worked Full Time,he Paid a Cleaning Service to Have