Under the value added method, which of the following would be included in the domestic product of the current year?
Answer and explanation
Correct answer: Current-year service fee charged by a property broker on the sale of an old house
The resale value of an old house is not current production because the house was produced and counted when it was originally constructed. However, the property broker performs a current-year brokerage service, and the fee is payment for that newly produced service, so it is included in domestic product. An old-age pension is a transfer payment, while share purchases are financial transactions; neither represents current production. Therefore, option B is correct.
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What is the correct answer to this question?
Current-year service fee charged by a property broker on the sale of an old house
Why is this the correct answer?
The resale value of an old house is not current production because the house was produced and counted when it was originally constructed. However, the property broker performs a current-year brokerage service, and the fee is payment for that newly produced service, so it is included in domestic product. An old-age pension is a transfer payment, while share purchases are financial transactions; neither represents current production. Therefore, option B is correct.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Value Added/Product Method.
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