Question

Tim buys a house from Betty in 2011 for $200,000. Betty receives $185,000 and $15,000 goes to Mary, the real-estate agent. Betty originally purchased the house in 2007 for $240,000. What value is added to GDP in 2011 for this transaction

Answer 1

Answer:

$15,000 

Explanation:

Gross domestic product is the sum of all final goods and services produced in an economy within a given period which is usually a year.

When calculating GDP, only items produced in the current year are added. The house had been sold in 2007. Adding the sale to the GDP in 2011 would lead to double counting.

It's only the amount paid to the agent that would be added to GDP.

I hope my answer helps you