Thank you for visiting Assume that a grower of flower bulbs sells its annual output of bulbs to an internet retailer for 80 000 The retailer in turn brings. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
Final answer:
GDP for Country A is $3,030 billion, calculated by summing exports, government purchases, business investment, and consumption while subtracting imports.
Explanation:
Gross Domestic Product (GDP) can be calculated by adding the value of exports, government purchases, business investments, and consumption spending while subtracting imports. In this case, GDP = $20 billion (exports) + $1,000 billion (government purchases) + $50 billion (business investment) + $2,000 billion (consumption spending) - $40 billion (imports).
The dollar value of GDP for Country A is $3,030 billion.
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Rewritten by : Jeany
In the provided scenario, the sales of flower bulbs from the grower to the retailer, and then to the final customers, would contribute $125,000 to the personal consumption expenditures and thus to the GDP, as only the final sales to consumers are considered in GDP calculations to prevent double counting.
The question involves understanding how transactions contribute to personal consumption expenditures (PCE) and thus to the Gross Domestic Product (GDP). In the given scenario, a flower bulb grower sells the annual output to an internet retailer for $80,000, and then the retailer sells these to the final customers for $125,000. For calculating GDP, only the final sales to the end consumers are considered to avoid double counting. Therefore, these two transactions would add $125,000 to the personal consumption expenditures and thus to the GDP during the year.
