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Equivalent Methods of Computing GDP (6 points)Consider a simple
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Equivalent Methods of Computing GDP (6 points)Consider a simple economy consisting of only four firms. Firm A, a miningenterprise, extracts iron ore. Firm B, a steelmaker, produces steel sheets. Firm C,a carmaker, makes automobiles while Firm D produces automobile tires.In 2016, Firm A extracts 50,000 tons of ore, valued at \$200 per ton, usingpreviously existing machinery. Firm B produces 10,000 tons of steel sheets,valued at \$3,000 per ton, having bought and used all of the ore produced by FirmA. Firm C manufactured 5,000 vehicles and sold them all to households for\$20,000 each, having purchased 8,000 tons of steel sheets from Firm B. Inaddition, Firm C imported 5,000 engines from a foreign subsidiary, each valued at\$5,000, and purchased 20,000 tires from Firm D for \$100 each. Firm D produced100,000 tires valued at \$100 each, but only sold 60,000 tires during 2016. Firm Dpurchased 2,000 tons of steel sheets from Firm B since all of their tires are steelbelted radials.Calculate GDP in 2016 for this economy using the production (value-added)approach. Also, calculate GDP in 2016 using the expenditure approach. Youneed to show all of your work for full credit.

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This question was answered on: Feb 21, 2020

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