Question.3264 - 1. A flour mill produces $1000 worth of flour, of which $700 goes to a bakery and $300 to consumers. A water supplier produces $300 worth of water, of which $200 goes to the bakery and $100 to consumers. The bakery produces $1500 worth of bread and sells all of it to consumers. The three companies pay wages as follows: the mill pays $400, the water supplier $200, and the bakery $200. There are no other costs of production. a. Calculate GDP based on the value of production. (3 marks) b. Calculate profits to the owners of each of the three companies (profit = revenue minus costs). (6 marks) c. Calculate GDP based on income. (3 marks) 2 a. Statistics Canada provides the following data on domestic expenditure. Fill in the missing data in the table. (10 marks) Gross domestic product, expenditure-based ($millions, at market prices) Year 2005 2006 2007 2008 2009Gross domestic product Personal expenditure on consumer goods and services758 966 801 742 851 603 890 351 898 728Government current expenditure on goods and services259 857 277 608 293 608 314 329 333 942Government gross fixed capital formation37 067 41 151 45 321 50 955 59 078 Government inventories 27 -41 15 29 -3 Business gross fixed capital formation255 596 283 382 301 885 313 574 269 394Business investment in inventories10 587 9 403 8 251 5 443 -8,1772Exports of goods and services519 435 524 075 534 718 563 948 438 553Deduct: Imports of goods and services468 270 487 674 505 055 539 012 464 722b. Statistics Canada provides the following data on domestic income. i. Calculate GDP based on these data and compare your results with those in the table of Problem 3. (10 marks) ii. Statistical discrepancy is equal to half the difference between the expenditure and income- based GDP calculations. Calculate statistical discrepancy. (5 marks) Year 2005 2006 2007 2008 2009Income-based GDP ($millions) Wages, salaries, and supplementary labour income695 093 743 392 784 885 818 613 819 066Corporation profits before taxes186 585 197 286 200 943 216 970 146 897Government business enterprise profits before taxes15 293 14 805 15 493 16 355 12 975Interest and miscellaneous investment income61 421 66 404 71 589 83 998 63 947Accrued net income of farm operators from farm production1 210 -35 503 3 228 880Net income of non-farm unincorporated business, including rent84 024 86 785 89 908 91 331 98 999Inventory valuation adjustment -730 -3 262 2 449 -6 214 2 541 Taxes less subsidies on factors of production61 982 64 536 67 900 71 094 70 604Net domestic product Taxes less subsidies on products93 302 96 052 98 816 94 840 93 030Capital consumption allowances176 246 185 201 196 346 209 383 218 785Statistical discrepancy Source: Statistics Canada, CANSIM, table (for fee) 380-0001 and Catalogue no. 13- 001-X. Last modified: 2010-05-31.3 3. The following table shows the consumption goods categories that Statistics Canada uses to compute the consumer price index, their weights as percentages in a typical consumer’s total expenditure, as well as some hypothetical prices of those generic goods. Since the weights are adjusted such that their sum is 100, the year 1 prices are given as price ratios p 1 /p 0 , where p 0 is the base year price. Category of goods and services (i)Weight in CPI formula (w i ) (percent)Price ratio p 1 /p 0 (p i ) Year 1Price ratio p 2 /p 0 (p i ) Year 2 Food 16.9 1.2 1.3 Shelter 26.8 0.9 0.85 Household operations and furnishings10.6 1.5 1.4 Clothing and footwear 5.4 1.08 1.92 Transportation 19.8 0.98 1.1 Health and personal care4.5 2.3 2.4Recreation, education, and reading12.0 1.09 1.1Alcoholic beverages and tobacco products4.1 2.02 2.1a . Calculate the consumer price index in Year 1 and Year 2. (4 marks) b . Calculate the inflation rate in Year 1, Year 2, and between Year 1 and Year 2. (6 marks) c . Explain how the weights in column 2 were determined. (2 marks)4. a. The real GDP per capita in an economy increases at a rate of 2.6 percent. Calculate the number of years that it takes for real GDP to double. (6 marks) Hint: The Principles of Logarithms may make the calculation easier. b. Assuming that the current GDP per capita is $40 000 and the growth rate will be on average 2.6 percent, how much will GDP per capita be after 10 years? After 20 years? After 30 years? (3 marks) 5. Use the data below to find out the growth of income per person (over the entire period, not an annual basis) between the two years listed. (4 marks) Year Real GDP Population 1990 $4 915 600 million 233 million 2010 $9 243 800 million 283.5 million
Answer Below:
Given xxxxx Mill xxxxx Production xx flour xxxxxx that xxxx to xxxxxx Amount xxxx goes xx customers xxxxx Paid xxxxx supplier xxxxx production xxxxxx that xxxx to xxxxxx Amount xxxx goes xx customers xxxxx Paid xxxxxx Total xxxxxxxxxx Wages xxxx a xxx by xxx values xxxxx method xx given xx the xxxxxx added xx each xxxxxxxx The xxxxx production xx the xxxxx mill xx of xxxxx goes xx the xxxxxx The xxxxx production xx the xxxxx supplier xx of xxxxx goes xx the xxxxxx The xxxxxxxxxx by xxx bakery xx The xxxxx added xx the xxxxxx is xxxxxxxxx - x Hence xxx total xxxxx added x The xxxxxx earned xx the xxxxx mill xxx water xxxxxxxx and xxx bakery xx the xxxxxxxxxx between xxx amount xxxx reaches xxx consumers xxxxxxx and xxx amount xx pays xx wages xxxxx Thus xxx profit xxxxxx by xxx flour xxxx - x The xxxxxx earned xx the xxxxx supplier x - xxx profit xxxxxx by xxx bakery x GDP xxxxx on xxxxxx is xxxxxxxxxx by xxxxxx the xxxxxxxx to xxx factors xx production xx this xxxx it xxxxx be xxxxxx up xxx wages xxxxx by xxx flour xxxx The xxxxx supplier xxx the xxxxxx The xxx a xxx Personal xxxxxxxxxxx on xxxxxxxx goods xxx services xxxxxxxxxx current xxxxxxxxxxx on xxxxx and xxxxxxxx Government xxxxx fixed xxxxxxx formation xxxxxxxxxx gross xxxxx capital xxxxxxxxx Business xxxxx fixed xxxxxxx formation xxxxxxxx investment xx inventories xxxxxxx of xxxxx and xxxxxxxxx Imports xx goods xxx servicesGross xxxxxxxx product xxxxxxxxxxxxxxxxx millions xx market xxxxxx Year xxxxx domestic xxxxxxx Personal xxxxxxxxxxx on xxxxxxxx goods xxx services xxxxxxxxxx current xxxxxxxxxxx on xxxxx and xxxxxxxx Government xxxxx fixed xxxxxxx formation xxxxxxxxxx inventories x - xxxxxxxx gross xxxxx capital xxxxxxxxx Business xxxxxxxxxx in xxxxxxxxxxx - xxxxxxx of xxxxx and xxxxxxxx Deduct xxxxxxx of xxxxx and xxxxxxxx bYear xxxxxxxxxxxx GDP xxxxxxxx Wages xxxxxxxx and xxxxxxxxxxxxx labour xxxxxx Corporation xxxxxxx before xxxxx Government xxxxxxxx enterprise xxxxxxx before xxxxx Interest xxx miscellaneous xxxxxxxxxx income xxxxxxx net xxxxxx of xxxx operators xxxx farm xxxxxxxxxx - xxx income xx non-farm xxxxxxxxxxxxxx business xxxxxxxxx rent xxxxxxxxx valuation xxxxxxxxxx - x - xxxxx less xxxxxxxxx on xxxxxxx of xxxxxxxxxx Net xxxxxxxx product xxxxx less xxxxxxxxx on xxxxxxxx Capital xxxxxxxxxxx allowances xxxxxxxxxxx discrepancy xxxxxx Statistics xxxxxx CANSIM xxxxx for xxx - xxx Catalogue xx - xx Last xxxxxxxx - x Category xx goods xxx services x Weight xx CPI xxxxxxx w x percent xxxxx ratio x p xxxxx ratio x p x i x p x i x p x i x i xxxx Year xxxx Shelter xxxxxxxxx operations xxx furnishings xxxxxxxx and xxxxxxxx Transportation xxxxxx and xxxxxxxx care xxxxxxxxxx education xxx reading xxxxxxxxx beverages xxx tobacco xxxxxxxx Consumer xxxxx Index xx Year x Let xxx original xxx b xxxxxxx by x So xxxxxx the xxxxxx shall xx denoted xx x xxx rate xx growth xx given xx The xxxxxx is x method xx compounding xxxx we xxx use xxx formula x r x Where x is xxx original xxx r xx the xxxx of xxxxxx t xx the xxxxxx of xxxxx Hence x t x or x or x or x log xxx or x log xxx Thus xxx GDP xxxxx a xxxxxx more xxxx years xx double xxxxxx b xxxx again xx use xxx above xxxxxxx P x t xxxxx P x t xxxxx Thus xxxx t xxxxx When x years xxx Real xxx in xxx year xx million xxx the xxxxxxxxxx is xxxxxxx The xxxx GDP xx the xxxx is xxxxxxx and xxx population xx million xxx income xxx person xx Real xxx in xxxxxxxxxx in xxx income xxx person xx Real xxx in xxxxxxxxxx in xxxxxxxxx the xxxx in xxxxxx per xxxxxx over xxx entire xxxxxx The xxxxxx per xxxxxx in x The xxxxxx per xxxxxx in xMore Articles From Accounting
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