In early 2010 Molly paid $200,000 for a house built in 2000.She spent $30,000 on new materials to remodel the house.Although Molly lived in the house after she remodeled it,its rental value rose.Which of the following contributed to real GDP in 2010?

Question

Quizplus · Accepted Answer

The cost of remodeling materials contributes to real GDP as it involves the production of goods and services. The increase in rental value reflects an increase in the service value of the property. The purchase price of the house does not contribute to GDP as it is a transfer of ownership of an existing asset.

In Early 2010 Molly Paid $200,000 for a House Built