Is it sometimes? ever?? never?? it is an investment.. but is it spending? i'm confused how to determine. Thanks.
2006-12-11 11:39:12 · 4 answers · asked by JustMe1962 3 in Social Science ➔ Economics
if GDP is C+I+G+X = isn't the products used in a property considered consumption??
2006-12-11 11:54:17 · update #1
It would be considered "sweat equity" & although you are spending money on materials & tools to do the job, you are not helping economy because you are not actually hiring a worker or company to earn a wage & contribute to the economy of your area with local, state, or federal taxes (if you are in the US). It COULD increase the value of your property, thus raising your yearly property tax, but it usually just keeps your house in better shape & if you sell it, then it will contribute to the economy by having a higher selling price, thus raising the property taxes in a permanent rate hike. Sometimes a DIY job can de-value your property, especially if it is done without the required permits, thus costing more to remove it & re-install up to code!
2006-12-11 11:58:47 · answer #1 · answered by Anonymous · 0⤊ 0⤋
GDP measures market activity. If you do something for yourself, it doesn't count. If you are paid to do the same thing for someone else it does. It is looked at the same way as cooking your own food , cleaning your house, or fixing your car. The material you buy is considered consumption but so is any labor you employ to help. But at least you don't have to pay income tax on the value of your labor and if you sell and make a profit you have a large deductible if it is your home.
2006-12-11 21:29:10 · answer #2 · answered by meg 7 · 0⤊ 0⤋
If you do it yourself, it could fall EITHER under consumption or investment, not both....likely investment, though.
It isn't a purchase of a brand new house, but you're causing (hopefully) a capital gain, so that money you spend at Home Depot shouldn't count as consumption but private investment.
If you pay a contractor to do it, then it is definitely consumption as you are consuming their services.
2006-12-12 00:48:18 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Gross Domestic Product relates to the OUTPUT of a nation in terms of EXPORTING domestically made products.
But enjoy refinishing your basement, it will probably increase the value of your property.
2006-12-11 19:45:25 · answer #4 · answered by alwaysbombed 5 · 0⤊ 1⤋