1. Raphael pays Better Buy $800 to for a new high-definition television (HDTV) a

Question

1. Raphael pays Better Buy $800 to for a new high-definition television (HDTV) and its installation. He's attracted by Better Buy's guarantee that he'll be happy with the new HDTV, or he'll get his money back. 2. Better Buy pays Firedog $650 to install the HDTV 3. Firedog buys hardware worth $50 from The Home Station Compute contributions to GDP, using the expenditure approach. Assume that The Home Station receives the hardware at no charge and that other costs are zero Hint: Add the amount of money spent by buyers of final goods and services Which of the following would be included in the expenditure method of calculating GDP? Check all that apply. Raphael spends $800 Firedog spends $50 Better Buy spends $650 The total contribution to GDP, measured by the expenditure method, is Now use the following table to compute contributions to GDP, employing the resource cost-income approach. In particular, indicate the costs of intermediate goods and the value added at each stage of production Stage of Production The Home Station Firedog Better Buy Sale Value $50 $650 $800 Cost of Intermediate Goods Resource Cost-Income sale value value added cost of intermediate goods The contribution to GDP that you found using the expenditure approach corresponds to the sum of the stage of production at each

Explanation / Answer

The total contribution to GDP, measured by the expenditure method is $800.

The contribution to GDP that you found using the expenditure approach corresponds to the sum of the home station and better buy ($800+$50) $850 at each stage of production.

Please note that only production of goods is involoved in calculation of GDP.

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