Which transaction is excluded from the calculation of a country's current GDP?
Correct answer: C. The sale of a previously owned house
- A. The sale of a newly produced machine
- B. The construction of a new residential house
- C. The sale of a previously owned house
- D. The production of newly made clothing
Explanation
GDP measures the value of current production, so the original sale of a previously owned house is not counted again. The fees paid to an estate agent for arranging that sale may be included as current services.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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