The patersons bought a home that was newly constructed in 2007 for $275,000. they sold the home in 2015 for $255,000. which of the following statements is correct regarding the sale of the house? a. the 2015 sale increased 2015 gdp by $255,000; and caused 2007 gdp to be revised downward by $20,000.
b. the 2015 sale increased 2015 gdp by $255,000 and had no effect on 2007 gdp.
c. the 2015 sale affected neither 2007 gdp nor 2015 gdp.
d. the 2015 sale reduced 2015 gdp by $20,000 and had no effect on 2007 gdp.

The statement that is correct is;

d. The 2015 sale reduced 2015 GDP by $20,000 and had no effect on 2007 GDP.

Explanation:

GDP is known as the Gross Domestic Product. The GDP is a measure of the quantity of goods and services that are produced in a country during a certain period in time. The GDP is usually expressed in monetary terms. A high GDP usually translates to high levels of production. It is often used to determine how wealthy a country is in relation to the production capabilities. To determine a change in GDP, we need to determine the Net national product as follows;

NNP=GDP-D

where;

NNP=net national product

GDP=gross domestic product

D=depreciation

In our case;

NNP=$255,000

GDP=$275,000

D=d

replacing;

255,000=275,000-d

d=275,000-255,000=20,000

The depreciation=$20,000

The 2015 sale reduced 2015 GDP by $20,000 and had no effect on the 2007 GDP.

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