You just bought a 10-year-old house. How did you purchase the house? What happen

Question

You just bought a 10-year-old house. How did you purchase the house? What happens when you purchase a house that involves the GDP. The house is located in an expensive neighborhood. You do have to do some repairs. You have options on who does the repairs. How do the repairs impact the Gross Domestic Product?

Instructions

Read the scenario above.

In a post to the discussion, respond to the following:

How do those transactions influence the Gross Domestic Product?

If the house is purchased with the assistance of a real estate agent, is this payment (commission) to the real estate agent included in Gross Domestic Product and how? Is the purchase of the house included in the GDP and how? Remember you will purchase the house from an individual. A mortgage is thought a bank or financial institution usually finance the bank unless you can pay cash for the house. The house purchase has closing costs, taxes and title costs within the county location. Is the mortgage a Federal Housing Administration or conventional loan. In South Carolina, a house sale involves an attorney to close the sale. Answer your question carefully and think how the Gross Domestic Product is influenced by all the transactions.

You then hired a local contractor to re-do the wiring. You paid the contractor $10,000 for rewiring the house.

. The contractor had to buy new wire. How does the purchase of wire by the contractor influence Gross Domestic Product?

What if you had done the wiring yourself influence the Gross Domestic Product? In this case, you bought $2,000 in wire to completed the task. Can you rewire the wiring with the wiring codes of the county?

How would any of this influence GDP or not influence GDP?

Think of the "Cycle of Money" in determining the influence on the Gross Domestic Product.

Why do the two methods of wiring the house have different implications for calculating GDP when the actual production (a house rewired) is the same? Where does the house purchase have implications on the GDP?

Explanation / Answer

The house is purchased through a broker. The purchase of household is not counted in the GDP since this will lead to double counting of the assets, however the payments to the broker for his service is counted in the GDP. The expenditure on repairs is counted in GDP and increases the value of GDP.

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