If an old house is sold and an agent receives commission what will be included in current GDP?
Answer and explanation
Correct answer: Only the commission for the agent's current service
GDP measures current production during the accounting period. The old house was produced in an earlier period, so its resale value is not counted again; otherwise the same structure would be double-counted. However, the estate agent provides a new brokerage service in the current period, and that commission is current production and is included. Thus A is correct, while B and C incorrectly count the old asset and D omits the service.
Frequently asked questions
What is the correct answer to this question?
Only the commission for the agent's current service
Why is this the correct answer?
GDP measures current production during the accounting period. The old house was produced in an earlier period, so its resale value is not counted again; otherwise the same structure would be double-counted. However, the estate agent provides a new brokerage service in the current period, and that commission is current production and is included. Thus A is correct, while B and C incorrectly count the old asset and D omits the service.
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.
