Tom and Lilly rented a house for $12,000 last year. At the start of the year they bought the house they had been renting directly from the owner for $250,000 . They believe they could rent it for $12,000 this year, but stay in the house. How much does Tom and Lilly's decision to buy the house change GDP?

a. it reduces GDP by $12,000
b. it does not change GDP
c. it raises GDP by $238,000
d. it raises GDP by $250,000

b

Economics

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GDP is used in an attempt to

A) calculate the profitability of a country. B) measure the economic performance of a country. C) determine the overall well-being of a country. D) figure out the prices of all goods and services exchanged in the legal economy. E) guide entrepreneurs toward more profitable investment decisions.

Economics

One cost of an unanticipated inflation is that it

A) transfers wealth from lenders to borrowers. B) transfers wealth from borrowers to lenders. C) decreases menu costs. D) increases the purchasing power of money.

Economics