Refer to Table 8-9. Suppose that the above table represents the goods and services produced in a very simple economy in 2016. Assume that steel is used as an input in the production of autos. Using that information, calculate GDP for the year 2016
What will be an ideal response?
First, we must decide which goods to include in the calculation of GDP. GDP is defined as the money value of final goods and services produced. Since steel is included in the production of autos, it is an intermediate good, not a final good. So steel should be excluded from the calculation. Final goods and services are goods and services consumed by the ultimate user of the good or service. All the other goods and services in the table are considered final goods.
Next, the money value of these final goods and services must be calculated. The money value is found by multiplying the price of the good or service times the quantity produced of that good or service. The total money value is found by summing up the individual money values. Thus GDP for 2016 = ($200 × 5,
You might also like to view...
Which of the following represents the true economic cost of production when firms produce goods that generate negative externalities?
A) the private cost of production B) the external cost of production C) the social cost of production D) the explicit cost of production
If the price of a pizza increases and the demand curve for pizza does not shift, then the consumer surplus from pizza will ________
A) increase B) decrease C) equal the producer surplus if the market produces the efficient quantity of pizza D) remain the same
When examining the financial status of households, wealth is
A) synonymous with income. B) a flow variable whereas income is a stock variable. C) a stock variable and includes both tangible assets and human capital. D) not as important as income because wealth does not change over time.
Which of the following barometric indicators would be the most helpful for forecasting future sales for an industry?
a. lagging economic indicators. b. leading economic indicators. c. coincident economic indicators. d. wishful thinking e. none of the above