Suppose an economy produces steel, wheat, and oil. The steel industry produces $100,000 in revenue, spends $4,000 on oil, $10,000 on wheat, pays workers $80,000. The wheat industry produces $150,000 in revenue, spends $20,000 on oil, $10,000 on steel, and pays workers $90,000. The oil industry produces $200,000 in revenue, spends $40,000 on wheat, $30,000 on steel, and pays workers $100,000. There is no government. There are neither exports nor
Suppose an economy produces steel, wheat, and oil. The steel industry produces $100,000 in
revenue, spends $4,000 on oil, $10,000 on wheat, pays workers $80,000. The wheat industry
produces $150,000 in revenue, spends $20,000 on oil, $10,000 on steel, and pays workers
$90,000. The oil industry produces $200,000 in revenue, spends $40,000 on wheat, $30,000 on
steel, and pays workers $100,000. There is no government. There are neither exports nor
imports, and none of the industries accumulate or decumulate inventories. Output not sold to
other sectors is sold as final goods
Q A government is introduced. First consider this policy: the government taxes oil
producers $10,000, and distributes this revenue to workers. Recalculate
income approach.
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