What is the value added on every stage of production? b) What is the GDP using the „value-added“ definition? c) What is the GDP using the income approach? d) What is the GDP using the expenditures approach? e) Show all transactions in the circular flow mode
Consider the following transactions of a model economy within
one year:
– Farmers employ workers for 75€ for harvesting wheat
– Millers buy the whole wheat for 140 € to produce flour and pay
their workers 50 €.
– Bakers purchase all flour for 250 € and pay their workers 125€
in order to bake bread. Bread is sold for 140 € to the
Government and for 360 € to private Households.
– Households pay 20% tax on their income and spend 90% of
their disposable income for consumption.
– There are no depreciations, indirect taxes and subsidies; the
trade balance is 0
) What is the value added on every stage of production?
b) What is the
c) What is the GDP using the income approach?
d) What is the GDP using the expenditures approach?
e) Show all transactions in the circular flow mode
Step by step
Solved in 5 steps with 2 images
