Joe builds himself a garage for his house in 2014 that is valued at $25,000. To

Question

Joe builds himself a garage for his house in 2014 that is valued at $25,000. To build the garage, he purchased new materials that year for a total cost of $15,000. The change in nominal GDP is this case would be:

A. an increase of $15,000 B. an increase of $10,000.C. an increase of $40,000.D. an increase of $25,000.

By how much does the current GDP rise in the following scenario? A real estate agent sells a house for $250,000 that the previous owners had purchased 10 years earlier for $90,000. The real estate agent earns a commission of $10,000.

A. $260,000 B. $250,000 C. $10,000 D. $170,000 E. $160,000

If the Grape Growers Association grows $10 million worth of grapes, sells $4 million worth of grapes to consumers, and uses the rest to make grape juice that is sold to consumers for $18 million, Apple Grower

Explanation / Answer

1. D. an increase of $25,000.

GDP is the money value of all the final goods and services produced in a year. Intermediate goods are not counted to avoid double counting.

2. C. $10,000

Asset created in previous year is not accounted in calculation of GDP, but the commission of the agent is included as its the payment for his services in current year.

3. A $22 million

Final goods and services = Grapes to consumer + market value of grape juice = 4+18 =$22 million

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