Assume an economy in which there are two producers (coconut producer and restaurant), consumers, and the government. Coconut producers harvest 6 million coconuts a year and sell them for $2 each. They sell 3 million to the restaurant and 3 million to the consumers. They spend $5 million on wages. They owe $1 million on interest on loans to consumers. Finally, they spend $2 million in taxes. The restaurant sells $20 million in meals. It spends $4 million in wages. Finally, it pays $3 million in taxes. The government runs the army. It pays $6 million in wages. In addition to the wage income and interest on loans, consumers receive all profits from production. They also pay $1m in taxes. Calculate GDP with the three different approaches taught in class.

Assume an economy in which there are two producers (coconut producer and restaurant), consumers, and the government. Coconut producers harvest 6 million coconuts a year and sell them for $2 each. They sell 3 million to the restaurant and 3 million to the consumers. They spend $5 million on wages. They owe $1 million on interest on loans to consumers. Finally, they spend $2 million in taxes. The restaurant sells $20 million in meals. It spends $4 million in wages. Finally, it pays $3 million in taxes. The government runs the army. It pays $6 million in wages. In addition to the wage income and interest on loans, consumers receive all profits from production. They also pay $1m in taxes. Calculate GDP with the three different approaches taught in class.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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