Question

If Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself, then GDP

A. necessarily rises.
B. necessarily falls.
C. will be unaffected because the same service is produced in either case.
D. will be unaffected because car maintenance is not included in GDP.

Answer 1

The correct answer is option b.

Step-by-step explanation:

Changing oil is a service provided by Speedy Lube. Susan used to get the oil changed in her car by Speedy Lube and paid them for it. The value of this service provided is included in GDP.

Suppose Susan switches from going to Speedy Lube to changing oil herself then GDP will decrease. This is because though she is creating the same service but it is herself, so it will not be included in the GDP.