A family sells the house they have lived in for two years to a friend. They received $300,000 and paid $200,000 three years ago. This transaction
A) increases GDP by $150,000.
B) increases GDP by $50,000.
C) has no effect on GDP because the house was not built this year.
D) has no effect on GDP because the buyer is the family's friend.

Question

Quizplus · Accepted Answer

This transaction has no effect on GDP because it does not involve the production of new goods or services. It is simply a transfer of ownership of an existing asset. GDP only includes the value of newly produced goods and services in a given year. Additionally, the relationship between the buyer and seller is not relevant to whether or not a transaction is included in GDP.

A Family Sells the House They Have Lived in for Two