What is included in GDP
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Smith purchases $10,000 in materials, and builds a $50,000 garage
Included Raises by $10,000, because that is the amount of materials purchased
The Jones Family sells its old house to the Reynolds family for $400,000. The Joneses then buy a newly constructed house from a builder for $500,000
Included Increases GDP by $500,000, because a new house was purchased for that amount
Smith pays a carpenter $50,000 to build a garage
Included Raises GDP by $50,000 because Smith paid for services
Smith goes into the woods, cuts down all his own wood, and builds a $50,000 garage
Not included Nothing was purchased
You purchased a used computer for $200
Not included Only applies to newly bought items
