5. Problems and Applications Q9 A farmer grows wheat, which she sells to a miller for $70. The miller turns the wheat into flour, which she sells to a baker for $120. The baker turn the wheat into bread, which she sells to consumers for $135. Consumers eat the bread. Assume that these transactions account for all economic activity in this economy. GDP in this economy is $ Value added is defined as the value of a producer's output minus the value of the intermediate goods that the producer buys to make the output. Assuming there are no intermediate goods beyond those just described, complete the following table by calculating the value added for each of the three producers. Then enter the total value added in the final row. Value Added Producer (Dollars) Farmer Miller Baker Total True or False: The total value added for the three producers in this economy does not equal the economy's GDP.

5. Problems and Applications Q9 A farmer grows wheat, which she sells to a miller for $70. The miller turns the wheat into flour, which she sells to a baker for $120. The baker turn the wheat into bread, which she sells to consumers for $135. Consumers eat the bread. Assume that these transactions account for all economic activity in this economy. GDP in this economy is $ Value added is defined as the value of a producer's output minus the value of the intermediate goods that the producer buys to make the output. Assuming there are no intermediate goods beyond those just described, complete the following table by calculating the value added for each of the three producers. Then enter the total value added in the final row. Value Added Producer (Dollars) Farmer Miller Baker Total True or False: The total value added for the three producers in this economy does not equal the economy's GDP.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Help Save Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $300. Camille uses the cloth to make prom dresses that she sells to Donita for $700. Donita sells the dresses for $1,400 to kids attending the prom. The total contribution to GDP of this series of transactions is 37:07 Multiple Choice O $2,500. ○ $700. O SC $1,400. $1,300. 1 2 zoom Q W A S $ % 54 #3 E ய сла 5 MacBook Pro K6 & * ( 7 8 9 R T Y U - +1 יו O O D F G H J K L Z X C T H option command > B N M - A جو P { } [ ] = ? command option
12. If Consumption equal $45M, Government spending equals $8M, Investment equal $7M, Exports equal $13, and Imports equal $26M, what is the GDP amount? A. $99 Million B. $47 Million C. $31 Million D. $21 Million
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2. In a couple sentences, explain the definition of GDP. What kinds of spending are included, and which are not?
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3. Calculate GDP for an economy with exports of $5 trillion, investment of $1.5 trillion, consumption spending of $11 trillion, imports of $6 trillion, government purchases of $3 trillion.
5. Limitations of GDP Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply. The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government The costs of air and water pollution Federal government paychecks to soldiers The variety of goods available to consumers When a U.S. company purchases and imports wood from Brazil to use to build new houses within the United States, this purchase increases the component of GDP while also net exports by the same amount. Therefore, the purchase of wood from Brazil causes in US GDP.
6. Limitations of GDP Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply. The costs of overfishing and other overly intensive uses of resources O Federal government paychecks to soldiers The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government The leisure time enjoyed by households When a U.S. company purchases and imports wood from Brazil to use to build new houses within the United States, this purchase increases the component of GDP while also net exports by the same amount. Therefore, the purchase of wood in US GDP. from Brazil causes
3. Limitations of GDP Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply. The quality of goods available to consumers The loss of enjoyment people incur when scenic land is converted to commercial use The value produced when you wash your own car at home O Federal government paychecks to soldiers When a U.S. company purchases and imports electronic parts from China to use to produce smartphones within the United States, this purchase increases the component of GDP while also net exports by the same amount. Therefore, the purchase of electronic parts from China causes in US GDP.
4. According to the following figure, what is the GDP? Please show how you computed it. Assume this is a closed economy. Does the "magic* equation hold? Show your work. Figure 2-2 Income (Y = ?) Transfer Payments = $300,000 Households Taxes = $300,000 Capital Market Private Savings = $900,000 Government Government Deficit = $300,000 Business Firms Private Investment = $600,000 Gov't Purchase of G&S = $300,000 Consumption Expenditures = $2,400,000
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