answersnipa - National Income and Product Accounting...

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National Income and Product Accounting Problems Solutions 1. First, fill out the gross and value added production statements for the wheat and bread producers. Gross Production Statement (Wheat) Costs Receipts Raw Materials $0m. Sales of Product $75m. Wages $60m. Inventory Change $15m. Business Profits $30m. Gross Value of Inputs $90m. Gross Value of Output $90 Wheat Producer’s GDP Costs Receipts Wages $60m. Sales of Product - Raw Materials $75m. Business Profits $30m. Inventory Change $15m. Value Added from Inputs $90m. Value Added to Output $90 Gross Production Statement (Bread) Costs Receipts Raw Materials $75m. Sales of Product $350m. Wages $200m. Inventory Change $0m. Business Profits $75m. Gross Value of Inputs $350m. Gross Value of Output $350
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Bread Producer’s GDP Costs Receipts Wages $200m. Sales of Product – Raw Materials $275m. Business Profits $75m. Inventory Change $0m. Value Added from Inputs $275m. Value Added to Output $275 Product accounting adds up value added by all producers. The wheat producer has no intermediate inputs and produces 30 million bushels at $3/bu. for $90 million. The bread producer produces 100 million loaves at $3.50/loaf for $350 million. The bread producer uses $75 million worth of wheat as an input. Therefore, the bread producer’s value added is $275 million. Total GDP is therefore $90 million + $275 million = $365 million. Income accounting adds up the value of income received by households. The households receive $260 million in wage income ($60m. + $200m.) and they receive $105 million in profit income ($30m. + $75m.). Total income adds up to $365 million. Expenditure accounting adds up the value of expenditures on final output.
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This note was uploaded on 07/17/2008 for the course ECON 502.01 taught by Professor Mccafferty during the Spring '08 term at Ohio State.

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answersnipa - National Income and Product Accounting...

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