Why may the imputed rent of an owner-occupied house be added to GDP?
Answer and explanation
Correct answer: Because the house provides housing services
National accounts aim to value current production of services, including housing services. When owners live in their own houses, no rent is actually paid, but the house still provides accommodation that could otherwise be rented in the market. An estimated or imputed rent represents the value of this current housing service and may be included in GDP. Thus option A is correct; ownership, imports, used housing, and transfers do not provide the reason.
Frequently asked questions
What is the correct answer to this question?
Because the house provides housing services
Why is this the correct answer?
National accounts aim to value current production of services, including housing services. When owners live in their own houses, no rent is actually paid, but the house still provides accommodation that could otherwise be rented in the market. An estimated or imputed rent represents the value of this current housing service and may be included in GDP. Thus option A is correct; ownership, imports, used housing, and transfers do not provide the reason.
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.
