Question

The Patersons bought a home that was newly constructed in 2007 for $275,000. They sold the home in 2015 for $255,000. Which of the following statements is correct regarding the sale of the house?a. The 2015 sale increased 2015 GDP by $255,000; and caused 2007 GDP to be revised downward by $20,000.

b. The 2015 sale increased 2015 GDP by $255,000 and had no effect on 2007 GDP.
c. The 2015 sale affected neither 2007 GDP nor 2015 GDP.
d. The 2015 sale reduced 2015 GDP by $20,000 and had no effect on 2007 GDP.

Answer 1

d that's the answer

" The 2015 sale reduced 2015 GDP by $20,000 and had no effect on 2007 GDP"

Step-by-step explanation:

Answer 2

The statement that is correct is;

d. The 2015 sale reduced 2015 GDP by $20,000 and had no effect on 2007 GDP.

Step-by-step explanation:

GDP is known as the Gross Domestic Product. The GDP is a measure of the quantity of goods and services that are produced in a country during a certain period in time. The GDP is usually expressed in monetary terms. A high GDP usually translates to high levels of production. It is often used to determine how wealthy a country is in relation to the production capabilities. To determine a change in GDP, we need to determine the Net national product as follows;

NNP=GDP-D

where;

NNP=net national product

GDP=gross domestic product

D=depreciation

In our case;

NNP=$255,000

GDP=$275,000

D=d

replacing;

255,000=275,000-d

d=275,000-255,000=20,000

The depreciation=$20,000

The 2015 sale reduced 2015 GDP by $20,000 and had no effect on the 2007 GDP.