Calculation of gdp using three different approaches

Assignment Help Macroeconomics

Reference no: EM1313997

Consider the following economy, which has three firms: Software.com; FastCar, Inc., and Integrated Steel. Software.com pays wages of $50 million to employees to design and distribute software. This firm has no costs other than labour. It sells $60 million of software to households and $40 million of software to FastCar, Inc. Integrated Steel owns iron mines and produces steel using iron from its mines. Its only cost is wages of $25 million. It produces $35 million of steel and sells all of this steel to FastCar, Inc. FastCar, Inc. pays $50 million to workers who use the $35 million of steel and the $40 million of software to produce cars. FastCar, Inc. sells all of its cars to households for a total of $130 million.

a. Assume that software purchases by businesses are treated as expenses, as they were before November 1999. Calculate GDP using three different approaches: expenditure approach, income approach, and product approach.

b. Now assume that software purchases by business are treated as investment, as they have been since November 1999. Calculate GDP using three different approaches: expenditure approach, income approach, and product approach.

Reference no: EM1313997

Questions Cloud

Probability-uniform distribution : What is the probability that a randomly chosen eight-week old baby smiles between 2 and 18 seconds?

Historical performance of a company : Analyzing the productivity and profitability of the company and historical performance of a company

Inverse probability based on the uniform distribution : Assume that the smiling time of eight-week old babies, in seconds, follows a uniform distribution between 0 and 23 seconds, inclusive. This means that any smiling time from 0 to and including 23 seconds is equally likely.

Computation of net income and annual rate of return and npv : Computation of net income and annual rate of return and NPV and Continuing the previous problem and Apricot Company had sales

Calculation of gdp using three different approaches : Assume that software purchases by businesses are treated as expenses, as they were before November 1999. Calculate GDP using three different approaches: expenditure approach, income approach, and product approach.

Pattern of correlation is statistically important : Explain in words general pattern of correlation is statistically important.

Conditional probability based on uniform distribution : Assume that the smiling time of eight-week old babies, in seconds, follows a uniform distribution between 0 and 23 seconds, inclusive. This means that any smiling time from 0 to and including 23 seconds is equally likely.

Sales director for an industrial supplies firm has collected : The sales director for an industrial supplies firm has collected information describing the performance also personal characteristics of 80 members of her sales force.

Roi and ri for the present fiscal year : Effect of ratios on given transactions and effect on the following measures: asset turnover, profit margin, ROI, and RI for the present fiscal year

User Account

All Pages