Tom and Lilly rented a house for $12,000 last year.At the start of the year they bought the house they had been renting directly from the owner for $250,000.They believe they could rent it for $12,000 this year,but stay in the house.How much does Tom and Lilly's decision to buy the house change GDP?

Question

Quizplus · Accepted Answer

Tom and Lilly's decision to buy the house does not change GDP. GDP measures the total value of goods and services produced within a country's borders within a specific period, usually a year. Since the purchase of the house is considered a transfer of assets and not a production of goods or services, it does not impact GDP. The $12,000 they paid in rent and the potential rental income of $12,000 are included in GDP as they represent transactions for goods and services.

Tom and Lilly Rented a House for $12,000 Last Year