George Lived in a Home That Was Newly Constructed in 2005

question 250

Multiple Choice

George lived in a home that was newly constructed in 2005 for which he paid $200,000. In 2008 he sold the house for $225,000. Which of the following statements is correct regarding the sale of the house?

• A)The 2008 sale increased 2008 GDP by $225,000 and had no effect on 2005 GDP.
• B)The 2008 sale increased 2008 GDP by $25,000 and had no effect on 2005 GDP.
• C)The 2008 sale increased 2008 GDP by $225,000; furthermore, the 2008 sale caused 2005 GDP to be revised upward by $25,000.
• D)The 2008 sale affected neither 2008 GDP nor 2005 GDP.

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Definitions:

Incorporation Process

The legal procedure by which a business entity is formed as a corporation, involving registration with the state, drafting articles of incorporation, and meeting other regulatory requirements.

Capital

Financial assets or the financial value of assets, such as cash or goods, used by a company to fund its operations and facilitate its growth.

Double Taxation

The imposition of tax by two or more jurisdictions on the same declared income, asset, or financial transaction.

S Corporation

A type of corporation in the United States that elects to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code, allowing profits to be passed directly to shareholders and avoid double taxation.