Tutorial_1_Introduction

Tutorial_1_Introduction - IBM uses these components and its...

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ECMA06H3S Tutorial #1 Notes Gross Domestic Product Review GDP Calculation Methods: 1) The expenditure approach Use by the government 2) The income approach 3) The value added approach Expenditure Approach Income Approach Value Added Approach Example of Value Added Approach: (From 2009 Midterm) Question 1-2: Suppose that an economy consists of only 4 firms: Intel, Samsung, IBM, and Sleeman’s. Suppose that this year Intel manufactures and sells \$200 million worth of computer chips to IBM so that IBM could use these chips in the manufacturing of its computer systems. Similarly, Samsung produces and sells \$300 million worth of computer monitors to IBM, and IBM again uses them in its computer systems.

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Unformatted text preview: IBM uses these components and its own to manufacture and sell \$1200 million worth of computer systems (for final use). Sleeman’s, on the other hand, produces and sells \$1800 million worth of beer for consumption. Assume, furthermore, that Sleeman’s does not buy any new computer systems during the year. Question 1 GDP increases by (in terms of millions): A) \$1200 B) \$3500 C) \$1700 D) \$3200 E) \$3000 F) \$1000 G) \$2000 H) \$2100 I) \$2300 J) \$1800 Question 2 IBM’s value added is (in terms of millions): A) \$900 B) \$200 C) \$300 D) \$700 E) \$1200 F) \$500 G) \$1700 H) \$600 I) \$1000 J) none of the above. 1 ECMA06 – Tutorial 1 2 3 ECMA06 – Tutorial 1 4...
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This note was uploaded on 12/21/2011 for the course ECONOMICS ECMA06 taught by Professor Dr.atamazaheri during the Spring '10 term at University of Toronto.

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Tutorial_1_Introduction - IBM uses these components and its...

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