Homework answers / question archive / What is the difference between “intermediate goods” and “final goods”?  Are eggs, for example, intermediate or final goods?  When are they intermediate goods and when are they final goods?   Consider a closed economy that consists of two sectors A and B

What is the difference between “intermediate goods” and “final goods”?  Are eggs, for example, intermediate or final goods?  When are they intermediate goods and when are they final goods?   Consider a closed economy that consists of two sectors A and B

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1. What is the difference between “intermediate goods” and “final goods”?  Are eggs, for example, intermediate or final goods?  When are they intermediate goods and when are they final goods?

 

2. Consider a closed economy that consists of two sectors A and B.  In year 2006, Firms in Sector A sold 600 units of their output to firms in Sector B as intermediate goods, 200 units to consumers, 250 units to firms who increased their physical capital stock, and 80 units to the government, and Firms in Sector B sold 350 units of their output to firms in Sector A as intermediate goods, 700 units to consumers, 300 units to firms who increased their physical capital stock, and 110 units to the government. Price of sector A product was $5 per unit and price of sector B product was $4 per unit in 2006.

1. Calculate the nominal GDP in 2006 using the expenditure approach.
2. Suppose the price of sector A product was $2 per unit and price of sector B product was $3 per unit in 1992.  Calculate the real GDP using 1992 as the base year.
3. What is the inflation rate at the end of 2006 in this economy since 1992?

 

 

3. Consider an economy that produces only milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon.  

	Year 1 (1999)	Year 2 (2000)
Good	Quantity           Price	Quantity           Price
Milk	8,000                 $4	10,000               $3
Butter	6,000                 $8	5,000                $14

 

1. 1. Using Year 1(1999) as the base year, what is the growth rate of real GDP from Year 1(1999) to Year 2 (2000)?
   2. Based on the GDP deflator, what is the inflation rate from Year 1(1999) to Year 2(2000)?

 

 

 

4. The Compagnie Naturelle sells mounted butterflies, using butterfly bait it buys from another firm for $20,000. It pays its workers $35,000, pays $1,000 in taxes, and has profits of $3,000. What is its value added?

1. $3000
2. $19,000
3. $39,000 D) $59,000

 

5)  Which of the following is included in U.S. GDP?

1. The sale of a new car from a manufacturer's inventory
2. The purchase of a watch from a Swiss company
3. The sale of a used car
4. A newly constructed house