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Macroeconomics GDP Question?
So here's the question:
Suppose there are two firms in an economy: A and B. A produces timber and sells it to B, which produces and sells tables. Neither firm had any inventory at the beginning of 2000. During that year, A produced enough timber for 50 tables. B bought 70% of that timber for $700 (each table takes $20 worth of timber) and promised to buy the other 30% in 2001. B produced 35 tables in 2000 and sold them for $30 each. What was the economy's GDP for 2000?
Now here's what I was doing-
GDP=Y= Consumption + Investment + Gov't Purchases + Net Export
C= 35x30=1050
I=700
G=0
NX=O
Therefore Y=1050+700=1750?
Please let me know if I'm on the right track and where I need to go and what to do!
Thanks!
3 Answers
- 1 decade agoFavorite Answer
The GDP should be calculated based on value added method
= Value of production - cost of raw materials used
For B
Value added = 35*30 - 700 = 350
For A
Value added = 20*50 = 1000
GDP = 1000 + 350 = 1350
- 5 years ago
if inflation is beneficial, then the Nominal GDP and Nominal GDP advance cost would be decrease than their nominal opposite numbers. the version between Nominal GDP and actual GDP is used to degree inflation in a statistic noted as The GDP Deflator. feels like it relies upon on no remember if inflation is beneficial or no longer.... a
- 1 decade ago
The formula and caculation is correct, but GDP and firms,,, GDP is mostly applied for the country, not only for the 2 or 3 company productions,,,