Why is the imputed value of housing services from owner-occupied homes included in GDP?
Answer and explanation
Correct answer: To measure comparable housing services of tenants and owner-occupiers
GDP records current production of final goods and services. A tenant pays rent for housing services, whereas an owner-occupier receives a similar service without a market rent being paid. National accounts therefore estimate an equivalent rental value and include it as imputed housing output. This improves comparability between renting and owning arrangements. It does not turn land sales into current production, include all household work, or exist merely to raise property tax.
Frequently asked questions
What is the correct answer to this question?
To measure comparable housing services of tenants and owner-occupiers
Why is this the correct answer?
GDP records current production of final goods and services. A tenant pays rent for housing services, whereas an owner-occupier receives a similar service without a market rent being paid. National accounts therefore estimate an equivalent rental value and include it as imputed housing output. This improves comparability between renting and owning arrangements. It does not turn land sales into current production, include all household work, or exist merely to raise property tax.
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.
