CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

Mike is a real estate broker. Recently he helped John purchase a 5-year-old house in New York for $300,000, making $12,000 (excluded from the $300,000 house price) as his commission. The amount counted towards U.S. GDP should be ______.
A. $0, since the house is old
B. $12,000 commission only
C. $312,000, the total price John paid
Explanation: Transactions involving the exchange of goods or assets produced during previous periods are not included, since they don't reflect current production. However, Mike provided services to arrange the sale and the $12,000 commission should be counted.

User Contributed Comments 3

User Comment
tenny45 Doesn't GDP include consumption + investment +exports - imports? Commission is compensation and therefore should not be counted, or so I thought.
danlan House is old, so the price was included in old GDP and should not be included again.
nzohoury Just out of curiosity, does the appreciation level of the house not get included anywhere in gov numbers? Maybe not GDP but somewhere else? I mean let's say the house was worth 100k before and now is worth 300k. The person could borrow against that to consume or start a business. It's almost like a measure of potential capacity of an economy? In average household asset calculations is the current price of the house taken into consideration or the transaftion cost minus principle remaining?
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