Assume an economy with two firms. Firm A produces wheat and firm B produces bread. In a given year, firm A produces 50,000 bushels of wheat, sells 20,000 bushels to firm B at $3 per bushel, exports 25,000 bushels at $3 per bushel, and stores 5,000 bushels as inventory. Firm A pays $50,000 in wages to consumers. Firm B produces 50,000 loaves of bread, and sells all of it to domestic consumers at $2 per loaf. Firm B pays consumers $20,000 in wages. In addition to the 50,000 loaves of bread consumers buy from firm B, consumers import and consume 15,000 loaves of bread, and they pay $1 per loaf fort his imported bread. Calculate gross domestic product for the year using (a) the product approach, (b) the expenditure approach, and (c) the income approach.
Production Approach:=50000*3+50000*2=250,000Expenditure ApproachY = C + I + G + (X − M) Y=45000*3+50000*2+5000*2-15000=230,000Income Approach=45000*3+50000*2=235,000
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