Money Spent on the Purchase of a New House Is

question 186

Multiple Choice

Money spent on the purchase of a new house is included in the GDP as a part of:

• A)the consumption of private fixed capital.
• B)personal consumption expenditures.
• C)personal saving.
• D)investment.

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Definitions:

Externalities

Costs or benefits that affect parties who did not choose to incur that cost or benefit, often leading to market failure if unaddressed.

Moral Hazard

A situation in which one party engages in risky behavior or lacks incentive to guard against risk because another party bears the consequences.

Moral Hazard

The situation in which one party can take risks because they know that they will not have to bear the full consequences of their actions.

Life Insurance

A contract between an insurer and a policyholder, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.