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.

---

Definitions:

FOB Destination

A shipping term indicating that the sale is considered complete and the goods owned by the buyer upon arrival at the buyer's location.

Credit Memo

A document issued by a seller to a buyer, reducing the amount owed, typically due to a return or refund.

Debit Delivery Expense

An accounting entry that increases the expense account related to the cost incurred for delivering goods or services.

Purchases Discounts

An allowance given by the seller to the buyer for early payment or for buying in bulk, reducing the amount owed.