Unformatted text preview: Number 5 OUTPUT= LABOR PAYED+CAPITAL PAYMENTS+PROFIT OUTPUT= 6 B + 2 B + 0 = 8 B OUTPUT = 8 BILLIONS Number 6 a. What is the value of output in this economy (i.e., nominal GDP) The total income of the economy will include only the value of the final goods (of bread in our case), so the total income of the economy is Y = 2*1 million = Rs. 2 million. b. How much value is added to the flour, yeast, sugar, and salt when the bakers turn them into bread? As we don't count the value of intermediate goods (flour, yeast, sugar, salt), then the value added to the flour, yeast, sugar & salt when the bakers turn into bread is zero....
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- Fall '19