The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given. Concept Introduction: Gross Domestic Product : It is the money value of final goods and services produced in a year.

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Answer 1

Question

Chapter 6, Problem 1P

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

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Table 1 contains price and quantity information for two products produced by Apple, the iPhone and Apple Watch for 2016 and 2017. Let’s assume that they were produced in the United States. Table 1: Apple Products 2016 2017 Price Quantity Price Quantity iPhone $1,200 300 $1,250 400 Apple Watch $500 800 $650 850 Calculate the amount contributed by Apple to nominal U.S. GDP from the sales of the two products in 2016 and 2017. Calculate the amount contributed

13 . Measuring GDP The following table shows data on consumption, investments, exports, imports, and government expenditures for the United States in 2016, as published by the Bureau of Economic Analysis. All figures are in billions of dollars. Fill in the missing cells in the table to calculate GDP using the expenditure approach. Data (Billions of dollars) Consumption (C) 12,757.9 Investment (I) 3,035.7 Exports (X) 2,232.4 Imports (M) 2,733.7 Net Exports of Goods and Services Government Purchases (G) 3,276.7 Gross Domestic Product (GDP)

Section 1, Measuring the Size of the Economy, introduces Gross Domestic Product, which is the value of all goods and services produced in a country in a given year. It is sometimes thought of as our nation’s income. For this discussion, your task is to: Explain the merits, and why we would expect to see a correlation between GDP and well-being. Explain the shortfalls of analyzing GDP, by itself, to assess the state of the economy.

Answer 2

Question

Chapter 6, Problem 1P

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

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Answer 3

Question

Chapter 6, Problem 1P

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

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Answer 4

Question

Chapter 6, Problem 1P

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

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Answer 5

Chapter 6, Problem 1P

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

Answer 6

Chapter 6, Problem 1P

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90

Answer 7

Chapter 6, Problem 1P

To determine

The difference between Income and expenditure approach of measuring GDP is to be explained, the concept of Value added is to explained and the final market price of the flour is to be determined with the help of the data given.

Concept Introduction:

Gross Domestic Product: It is the money value of final goods and services produced in a year.

Answer 8

Expert Solution & Answer

Explanation of Solution

Income and Expenditure are the two different approaches of measuring GDP. Income approach is calculated by adding incomes earned by various factors of production. It includes wages, rent, interest; profits .Whereas expenditure approach is calculated by adding total amount spent on total consumption, government purchases, net exports and investments by firms, households and government.
Value added is net addition made by producer while producing .It is calculated by subtracting cost of intermediate goods involved in production at each stage of production from the selling price of the product. This concept is very important in income approach as it helps in calculating profit when the profits of all intermediate producers are calculated and added. It gets clearer in the following example.
Market price of flour is divided into four stages

Stage 1: Farmer sells to miller at $0.24 . So His value addition is $0.24 .

Stage 2: Miller sells to wholesaler for $0.40 so miller's Value Addition is $0.40−$0.24=$0.16

Stage 3: Wholesaler sells to grocer for $2 so wholesaler’s VA is $2−$0.40=$1.60

Stage 4: Grocer sells to consumer for $0.90 so grocer's VA is $0.90−$2=−$1.10

Final market prices of flour = addition of all Value addition of four stages

= $0.24+$0.16+$1.60+(−$1.10)=$0.90