Assignment 1 - Macro Economics 314 Assignment 1 Page 56: 2....

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Macro Economics 314 Assignment 1 Page 56: 2. a. Consumption goes up $6 billion, investment stays constant, government spending stays constant, net exports stay constant, and GDP increases $6 billion. b. Consumption goes up $6 billion, investment stays constant, government spending stays constant, net exports drop by $6 billion, and GDP stays constant. a. Consumption stays constant, investment goes up $6 billion, government spending stays constant, net exports stay constant, and GDP increases $6 billion. b. Consumption stays constant, investment goes up $6 billion, government spending stays constant, net exports drop by $6 billion, and GDP stays constant. 3. a. Product Approach: contribution to GDP = $2,000,000 (value added by ABC) + $1,800,000 (value added by XYZ, $3,800,000 -$2,000,000) = $3,800,000 Income Approach: contribution to GDP = $1,000,000 (ABC compensation) + $800,000 (XYZ compensation) + $1,000,000 (ABC pre-tax profit) + $1,000,000 (XYZ pre- tax profit, including inventory increases) = $3,800,000
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Assignment 1 - Macro Economics 314 Assignment 1 Page 56: 2....

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