Suppose a closed economy. Chili and chili sauce are the only things produced in
ID: 1148880 • Letter: S
Question
Suppose a closed economy. Chili and chili sauce are the only things produced in the economy. The government collects $2,000 of tax from consumers, $5,000 from the chili farm and $5,000 from the chili sauce factory, and the government spends $12,000 to hire consumers to operate the government. The chili farm produces chilies that are worth $50,000. $20,000 of chilies are bought by consumers, and the rest $30,000 of chilies are bought by the chili sauce factory. The chili sauce factory produces chili sauce that is worth $50,000 and is bought by the consumers. Suppose the chili farm pays $15,000 to its workers, and the chili sauce factory pays $10,000 to its workers.
How much is the after-tax income of the consumers
A) $30,000
B) $32,000
C) $35,000
D) $37,000
Suppose a closed economy. Chili and chili sauce are the only things produced in the economy. The government collects $2,000 of tax from consumers, $5,000 from the chili farm and $5,000 from the chili sauce factory, and the government spends $12,000 to hire consumers to operate the government. The chili farm produces chilies that are worth $50,000. $20,000 of chilies are bought by consumers, and the rest $30,000 of chilies are bought by the chili sauce factory. The chili sauce factory produces chili sauce that is worth $50,000 and is bought by the consumers. Suppose the chili farm pays $15,000 to its workers, and the chili sauce factory pays $10,000 to its workers.
How much is the expenditure on consumption
$50,000
$60,000
$80,000
$70,000
Suppose a closed economy. Chili and chili sauce are the only things produced in the economy. The government collects $2,000 of tax from consumers, $5,000 from the chili farm and $5,000 from the chili sauce factory, and the government spends $12,000 to hire consumers to operate the government. The chili farm produces chilies that are worth $50,000. $20,000 of chilies are bought by consumers, and the rest $30,000 of chilies are bought by the chili sauce factory. The chili sauce factory produces chili sauce that is worth $50,000 and is bought by the consumers. Suppose the chili farm pays $15,000 to its workers, and the chili sauce factory pays $10,000 to its workers.
How much is the total spending on all final goods and services produced,
A) $62,000
C) $72,000
B) $70,000
D) $82,000
Explanation / Answer
(1) The after-tax income of the consumers is
The chili farm pays $15,000 to its workers, and the chili sauce factory pays $10,000 to its workers.
The government spends $12,000 to hire consumers to operate the government.
The government collects $2,000 of tax from consumers So the after tax income of consumers is =$15000+$10000+$12000-$2000
=$35000
(2) the expenditure on consumption is =
$20,000 of chilies and $50,000 chili sauce are bought by consumers
So the total expenditure is $70000.
(3) The total spending on all final goods and services produced is=
$20,000 of chilies and chili sauce $50,000 are bought by consumers, government spends $12,000 to hire consumers to operate the government so the total expenditure is
$82000
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