3. Three ways to calculate GDP Aa Aa Suppose that the following table shows info

Question

3. Three ways to calculate GDP Aa Aa Suppose that the following table shows information that can be used to calculate GDP for the economy of the fictional country Pistonia. Assume that there are only the following three companies in the country. Use your knowledge of GDP accounting to fill in the empty boxes in the appropriate cells in the table, and complete the statements that follow Pistonia Ore, Pistonia SteelPistonia Motors, Inc. ($) Inc. ($) Inc. ($) Total Factor Income Intermediate Goods Wages Interest Payments Rent Profit Total Expenditure by Firm Value of Sales Value Added per Firm 3,800 (ore) 2,500 200 850 950 8,300 (steel) 8,500 950 1,000 150 18,900 750 500 450 3,800 $13,100 1,900 2,350 1,550 $3,800 (ore) $8,300 (steel) $3,800 $4,500 $10,600 The value of GDP in Pistonia is The cells in the rightmost column of the table sum to GDP by the method The cells in the bottom row of the table sum to GDP using the method The table cell that corresponds to the value of sales by Pistonia Motors, Inc. gives GDP by the method aggregate spending value of production factor income earned

Explanation / Answer

Wages of Pistonia Ore = 3800-450-750-500 = 2100

Total expenditure by Pistonia Steel = 3800+2500+200+850+950 = 8300

Value of sales of Pistonia Motors = Total expenditure by firm = 18900

Total GDP by Factor Income method = 13100+1900+2350+1550 = 18900

Rightmost column - Factor income earned method

Cells in bottom row - GDP using aggregate spending

Piston motors gives GDP by Value of production

Last two part refer different question

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