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Calculating GDP in the Shirt Economy using the Expenditure Approach
In the simplified shirt economy, the Gross Domestic Product (GDP) as measured by the expenditure approach is $100. This calculation is based on the value of the final sale to the consumer, which is the finished shirt, and ignores the intermediate transactions of cotton ($50) and cloth ($80).
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Introduction to Macroeconomics Course
Ch.3 Aggregate demand and the multiplier model - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
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Calculating GDP in the Shirt Economy using the Expenditure Approach
Calculating GDP in the Shirt Economy using the Value Added Approach
In a simple economy, a farmer sells wheat to a miller for $20. The miller grinds the wheat into flour and sells it to a baker for $35. The baker uses the flour to make bread, which is then sold to a consumer for $50. Based on this information, what is the total value contributed to the economy by this entire production process?
Analyzing Value Added in a Production Chain
In a simplified economy, a cotton farmer sells raw cotton to a textile mill for $50. The mill processes the cotton into cloth and sells it to a shirt factory for $80. The factory then manufactures a shirt and sells it to a final consumer for $100. Match each production stage with the value it added to the economy.
Identifying Errors in Economic Calculation
Learn After
In a simple economy, a farmer sells wheat to a miller for $20. The miller grinds the wheat into flour and sells it to a baker for $35. The baker uses the flour to make bread and sells it to a grocery store for $60. Finally, the grocery store sells the bread to a customer for $75. Based on these transactions, what is the total contribution to this economy's gross domestic product (GDP)?
Identifying Errors in GDP Calculation
GDP Calculation for a New Car
An economy consists of three companies. Company A harvests raw lumber and sells it to Company B for $2,000. Company B uses the lumber to manufacture furniture, which it sells to Company C, a retailer, for $5,000. Company C then sells the furniture to a final consumer for $8,000. Based on these transactions, the total value added to the economy's gross domestic product (GDP) is $____.