Reference no: EM132488694
ABC Computer Company has a $20,000,000 factory in Silicon Valley. During the current year ABC build $2,000,000 worth of computer components. ABC costs are labour $1,000,000; interest on debt $100,000 and taxes $200,000.
ABC sells all its output to XYZ Supercomputers using ABC components. XYZ builds four supercomputers at a cost of $800,000 each ($500,000 worth of components, $200,000 in labour cost; and $100,000 in taxes per computer). XYZ has a $30,000,000 factory.
XYZ sells three of the supercomputers for $1,000,000 each. At year end, it had not sold the fourth. The unsold computer is carried on XYZ books an an $800,000 increase in inventory.
a. Calculate the GDP using income based and valued added methods.
b. Repeat part a, but now assume that, in addition to its other costs, ABC paid $500,000 for imported computer chip.
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