Question

Phillip is a real estate investor who flips homes. In May 2020, he bought a house for $1,300,000 and sold it two months later for $1,500,000. The real estate agent got 6% of the sale price as her commission. As a result of these transactions, the 2020 GDP increased by

a) $90,000
b) $120,000
c) $180,000
d) $60,000

Answer 1

The sale of the house by Phillip, a real estate investor, would increase the 2020 GDP by the amount of the real estate agent's commission. Calculating 6% of the $1,500,000 sale price gives us $90,000, which is the increase in GDP from this transaction.

Step-by-step explanation:

Phillip is a real estate investor who flips homes. He bought a house for $1,300,000 and sold it for $1,500,000 two months later. To find the impact on GDP, we must calculate the real estate agent's commission, which is 6% of the sale price. First, we calculate the commission: $1,500,000 * 0.06 = $90,000. Since the commission is the service fee that contributes to GDP, this transaction would increase the 2020 GDP by $90,000. Therefore, the correct answer is a) $90,000.