Help please ECON 1A-GDP Practice For each, indicate the dollar value that each c
ID: 1162807 • Letter: H
Question
Help please ECON 1A-GDP Practice For each, indicate the dollar value that each contributes to each component of GDP. Note that some items can contribute to more than one component of GDP. Assume that everyone in society gets paid a wage of S10 per hour for their market labor If an item does not contribute to GDP, write none". The first one is done for you as an example: Households spend 10,000 hours taking care of $20,000 children. Of these, 8,000 hours are parents taking (2.,000 hours care of their own children, and 2,000 hours are $10our spent on outside child care. Workers spend 12,000 hours on cleaning, Or these, 7,000 hours are spent cleaning their own homes, 2,000 hours are spent cleaning other people's homes and 3,000 hours are spent cleaning businesses. Businesses hire 4,000 hours of telephone technical support. Of these, 3,000 hours are by domestic firms and 1,000 hours are by foreign firms. The government hires 4,000 hours of law enforcement personnel Domestic businesses spend $10,000 on imported asparagus. They sell the asparagus to houscholds for $25,000. The government collects S$0,000 in taxes. Of this, $40,000 is spent on food stamp programs and S10,000 is used to pay tax collectors. Firms import $10,000 of copper. They use half to make electronics, which they sell to the government for $20,000, and the other half is stored for next year Better technology reduces time spent cooking at home by 4,000 hours.Explanation / Answer
1. Only hours for cleaning businesses will be counted
Thus, contribution to GDP is 3000*10 = $30,000
2. Only hours of labour by domestic firm will be considered
Thus, contribution to GDP is 3000*10 = $30,000
3. All the hours added by law enforcement agents will be added as contribution
Thus, total contribution is 4000*10= $40,000
4. The contribution to GDP is the difference between Revenue from sale to households mine the cost of manufacturing(import in this case). Thus the contribution to GDP is 25000-10000 = $15,000
5. The salaries of tax collectors should be included = $10,000
6. Contribution to GDP = Revenue from sale - cost of import+inventory for next year = 20,000-10,000+5000=$15,000
7. Nothing is included in GDP, since we are not sure what those 4,000 hours that are saved are used for(economic or non-economic activity)
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