Whether the economy growing more or less competitive and the ways to explain this trend. Concept Introduction : According to Shepherd, there were three sources that explained the increasing trend in the competitiveness of the U.S. Economy. They were: 1. Competition from Imports; 2. Deregulation; and 3. Antitrust Activity

Question

1. Suppose an economy produces steel, wheat, and oil. The steel industry produces $80,000 in revenue, spends $4,000 on oil, $8,000 on wheat, pays workers $60,000. The wheat industry produces $120,000 in revenue, spends $20,000 on oil, $10,000 on steel, and pays workers $80,000. The oil industry produces $180,000 in revenue, spends $20,000 on wheat, $20,000 on steel, and pays workers $80,000. There is no government. There are neither exports nor imports, and none of the industries accumulate or deaccumulate inventories. Calculate GDP using the production and income approaches. Please provide what rules/formulas are used to solve this and the final answer.

Answer 1

Question

Chapter 15, Problem 5.8P

To determine

Whether the economy growing more or less competitive and the ways to explain this trend.

Concept Introduction:

According to Shepherd, there were three sources that explained the increasing trend in the competitiveness of the U.S. Economy. They were:

1. Competition from Imports;

2. Deregulation; and

3. Antitrust Activity

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1. Suppose an economy produces steel, wheat, and oil. The steel industry produces $80,000 in revenue, spends $4,000 on oil, $8,000 on wheat, pays workers $60,000. The wheat industry produces $120,000 in revenue, spends $20,000 on oil, $10,000 on steel, and pays workers $80,000. The oil industry produces $180,000 in revenue, spends $20,000 on wheat, $20,000 on steel, and pays workers $80,000. There is no government. There are neither exports nor imports, and none of the industries accumulate or deaccumulate inventories. Calculate GDP using the production and income approaches. Please provide what rules/formulas are used to solve this and the final answer.

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