Why may a broker's service be included even though the sale of a used car is generally excluded from GDP?
Answer and explanation
Correct answer: Because the broker's service is produced in the current year
GDP records current production during a particular period. A used car was normally counted when it was first produced, so its resale does not represent new production and is excluded to avoid double counting. However, brokerage, advertising or transfer services supplied in the current year are newly produced services and their fees can be included in GDP. Therefore, option B is correct.
Frequently asked questions
What is the correct answer to this question?
Because the broker's service is produced in the current year
Why is this the correct answer?
GDP records current production during a particular period. A used car was normally counted when it was first produced, so its resale does not represent new production and is excluded to avoid double counting. However, brokerage, advertising or transfer services supplied in the current year are newly produced services and their fees can be included in GDP. Therefore, option B is correct.
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.
