A rancher raises sheep. Once a year he shears them and sells the raw wool to a processor who cleans it and spins it into yarn. The yarn is then sold to a knitting mill, which produces and sells sweaters. In calculating GDP we would count Select one: O a. only the yarn and the sweaters. O b. only the raw wool and the yarn. O c. the raw wool, the yarn and the sweaters. O d. only the sweaters.

A rancher raises sheep. Once a year he shears them and sells the raw wool to a processor who cleans it and spins it into yarn. The yarn is then sold to a knitting mill, which produces and sells sweaters. In calculating GDP we would count Select one: O a. only the yarn and the sweaters. O b. only the raw wool and the yarn. O c. the raw wool, the yarn and the sweaters. O d. only the sweaters.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter19: The Macroeconomic Perspective

Section: Chapter Questions

Problem 28P: Last year, a small nation with abundant forests cut down 200 worth of trees. It then turned 100...

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Why is the GDP deflator not an accurate measure of inflation as it impacts a household?
Last year, a small nation with abundant forests cut down 200 worth of trees. It then turned 100 worth of trees into 150 worth of lumber. It used 100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nations GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?
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