Suppose an Apartment Complex Converts to a Condominium,so That the Former

question 46

Multiple Choice

Suppose an apartment complex converts to a condominium,so that the former renters are now owners of their housing units.Suppose further that a current estimate of the value of the condominium owners' housing services is the same as the rent they previously paid.What happens to GDP as a result of this conversion?

• A)GDP necessarily increases.
• B)GDP necessarily decreases.
• C)GDP is unaffected because neither the rent nor the estimate of the value owner-occupied housing services is included in GDP.
• D)GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of owner occupied housing services.

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Definitions:

Deferred Revenue

Income received in advance for products or services which is recorded as a liability until it is earned.

Sales Returns

Transactions where customers return previously purchased merchandise, leading to a reversal of revenue previously recognized.

Purchase Discount

A reduction in the purchase price, offered by the seller to the buyer, as an incentive for early payment.

Terms 2/10 n/30

Payment terms indicating a 2% discount if paid within 10 days, otherwise the full amount is due within 30 days.