The value of new housing is (a) not included in GDP (b) included in GDP and based on the mortgage...

Question:

The value of new housing is

(a) not included in GDP

(b) included in GDP and based on the mortgage payment on the house

(c) included in GDP and based on the purchase price of the house

(d) included in GDP and based on the rental value of the house

Imputed rent

When we stay invour own house, we do not pay the rent to someone else. So the imputed rent is takrn into consideration, as if we are paying the rent to ourselves.

Answer and Explanation:

The answer is both option C and D.

If the GDP is calculated using Expenditure approach, then value of new housing is included as the purchase price of the house under the investment component.

If GDP is calculated using Income approach then the value of new housing is included as the rent.


Learn more about this topic:

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Gross Domestic Product: Items Excluded from National Production

from Economics 102: Macroeconomics

Chapter 4 / Lesson 4
346K

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