George Lived in a Home That Was Newly Constructed in 2005

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.