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If an old machine is sold and a repair company is paid what will be included in current GDP?

Answer and explanation

Correct answer: Only the repair service produced in the current year

GDP measures current production during the reference period, not every financial transaction. A used machine was produced in an earlier period, so its resale value is not counted again as current output; otherwise the same production would be double-counted. The repair company’s service is newly produced in the current year and its payment represents current market output. Thus C is correct. A and B include the old asset again, while D wrongly excludes the current repair service.

Related tags

Used GoodsCurrent GdpRepair ServicesDouble CountingGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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