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Upon Getting a Big Promotion, Sally Decides to Buy a House

Question 42

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Upon getting a big promotion, Sally decides to buy a house in the neighborhood she grew up in as a child. In fact, the house she buys used to belong to a neighbor of hers, and so she's certain it's in good shape and well worth the $200,000 she pays for it. The only thing Sally needs to do is replace all the gutters for $1,000, which she happily does. How will GDP be affected by Sally's recent purchases?


A) Consumption will increase by $1,000, and investment will increase by $200,000.
B) Consumption will increase by $210,000.
C) Investment will increase by $201,000.
D) GDP will increase by $1000.

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