If a broker earns commission on the sale of an old house what is included in current GDP?
Answer and explanation
Correct answer: Only the commission for the broker's current service
GDP measures current production within the accounting period. The old house was produced in an earlier period, so its resale value is not counted again as current output; otherwise there would be double counting. However, the broker provides a new service during the current period, and the commission is payment for that service. Therefore A is correct, not B, C, or D.
Frequently asked questions
What is the correct answer to this question?
Only the commission for the broker's current service
Why is this the correct answer?
GDP measures current production within the accounting period. The old house was produced in an earlier period, so its resale value is not counted again as current output; otherwise there would be double counting. However, the broker provides a new service during the current period, and the commission is payment for that service. Therefore A is correct, not B, C, or D.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
