# In shoetown a rancher takes 0 worth of inputs and

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3. In Shoetown, a rancher takes \$0 worth of inputs and produces animal skins, which he sells to the tanner for \$500. The tanner makes leather which she sells to the shoemaker for \$800. The shoemaker then sells \$2,400 worth of shoes. The GDP for this economy is: (a) \$1,900 (b) \$2,400 (c) \$ 8000 (d) \$ 3,700 (e) none of the above

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4. How much would the production of a kayak add to the GDP if the shell costs \$500, the paint costs \$35, the finisher costs \$55, the manufacturer sold it to the dealer for \$850, and the dealer sold it to his customer for \$1,050: 5. John mowed his own and Sarah’s lawn and Sarah paid him \$50 to mow her lawn. Now, Sarah decides to move her own lawn. As a result, in the national income accounts: 6. The following are the prices and quantities of pizzas and calzones, the only two goods produced by an economy, for the years 2005 and 2009. Quantity Price Quantity Price of of of of Pizzas Pizzas Calzones Calzones 2005 50 \$15 60 \$10 2009 90 \$20 80 \$15 (a) What is the nominal value of GDP in the year 2005? The year 2009? (b) Using 2005 as the base year, what is the real value of GDP in the year 2009? What is the real value of GDP in 2005? (c) By how much did real GDP increase between 2005 and 2009? (d) What is the value of the GDP deflator in the year 2009, using 2005 as the base year?
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