Instructor-created question Question Help Consider a small country with only thr

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Instructor-created question Question Help Consider a small country with only three producers Y. and Z who produce ink, pen and paper respectively Y uses ink output of X n its production of pens. X produces 1,363 liters of ink monthly, Y produces 58,174 pens monthly, and Z produces 12 metric tons of paper monthly X sells all of the ink it produces to Y at a market price of $352 per liter. Y sells 44,842 pens at a market price of S1 per pen and stores the rest as inventory Z sells all of its paper at the market price of $702 per metric ton. The annual market value of production in this economy is s 856749 12] (Round your answer to two decimal places ) In the economy described above, if we measure the economic activity by aggregating the expenditure on final goods of households and firms instead of aggregating production of firms, the annual market value will be the same This is true since Y's output lwhich was not sold is coded as having been purchased by Y tself Which of the following statements about gross domestic product (GDP) and the aggregate accounting identity are not true? (Check all that apply) A. GDP is a measure of sales to consumers DB. GDP is a measure of production C. The aggregate accounting identity states that Production: Income-Expenditure D. The aggregate accounting identity states that Production Income- Expenditure

Explanation / Answer

Introduction:-

The GDP collectively known and reffered to as the Gross Domestic Product is defined as the measure in monetary terms of the market value of all goods and services, produced over a period of time, usually annually or quaterly depending on the time of calculation.

In the mordern times countries use this as a yard stick to compare year on year month on month performace with itself and with that of other countries to be able to take critical decisions about the economy at large.

Answer:-

In the above statement like i clearly said GDP is the total value of final goods and services, it is not the measure of sales to the consumer.

It considers the total values of goods produced in the economy and is not measuring total sales. therefore option (A) IS NOT TRUE

B) It is true that GDP is a measure of production since it measures the total production in the year therefore this is TRUE

C) The concepts of GDP and Agregate accounting clearly state that there is a cyclical form in which Production=Income=Expenditure. Ie. Production is determined by the income of factor sources due to the demand and expenditure by the same. Therefore this is TRUE

D) As explained above in aggregate accounting Production=Income=Expenditure this statement that it is equal to Income-Expenditure is FALSE

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