HW1-Answer Key(4)

20 2011 income2011 cost of consumption basket 145 118

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Unformatted text preview: 1.20 2011 income/2011 cost of consumption basket = $145 /$118 = 1.23 2012 income/2012 cost of consumption basket = $190/$158 = 1.20 →A middle class citizen could afford to consume most in the year 2009. (1.25 > 1.23 > 1.20) Answer to Q5 (20 Points) i. In 2012, the value added by Roy : $2000 Harriet: (450*5) + (450*0,5) – 1800 = 675 Arnold: (400*10) - (400*5) = 2000 Oscar : (400*2) - (400*0,5) = 600 3 Stony Brook University ECO 305 – Summer II, 2013 Arda Aktas 07/11/2013 ___________________________________________________________________________ - The dollar value of the final sales in the economy: One cow + Steaks sold + Franks sold = 200 + (400*10 + 50*5) + (400*2 + 50*0,5) = 5275 - The dollar value of the change in inventories: 50 steaks = 50*5 = 250 - GDP= Total value added = 2000 + 675 + 2000 + 600 = 5275 ii. The value added by 25 of steaks used for barbeques is the same as value added of 25 steaks kept in inventory. In both case the value added is zero. Thus GDP in 2012 does not change....
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