During 1995, the following economic activities took place in the small country o

Question

During 1995, the following economic activities took place in the small country of Tera Haute: *Quale Tool and Die, a company headquartered in Tera Haute, produced $2,000,000 in new aircraft parts at its Tera Haute plant; however, none of these parts were sold. *Quale Tool and Die also sold $500,000 in aluminum cans to Country Cola, Inc., (another company headquartered in Tera Haute). The cans had been produced at Quale Tool and Die’s Tera Haute plant in 1994. *Country Cola, Inc. filled all of the aluminum cans with cola at its Tera Haute plant, and sold $800,000 in Country Cola to the consumers of Tera Haute. *The city of Baye, the capital of Tera Haute, purchased $100,000 in new hats for its tax collectors (public employees). The hats were produced in Tera Haute during 1995. * Quale Tool and Die produced $700,000 in ceramic pots at its foreign plant, located in Canada. The pots were imported into Tera Haute where consumers purchased all the pots. * Pet Rock, LTD produced $200,000 in Pet Rocks at its Tera Haute plant and exported all $200,000 to Brazil. Given all this, please use the expenditures approach to calculate the nominal GDP for Tera Haute for 1995, as well as the 5 individual components of: consumption, investment, government spending, exports and imports, all in nominal terms. (HINT: Go through each transaction and first decide if it is included in GDP, then decide which component(s) of GDP are affected. Total personal consumption was $ Total Investment was $ Total Government Expenditures was $ Total Exports was $ Total Imports was -$ Total Gross Domestic Product was $ During 1995, the following economic activities took place in the small country of Tera Haute: *Quale Tool and Die, a company headquartered in Tera Haute, produced $2,000,000 in new aircraft parts at its Tera Haute plant; however, none of these parts were sold. *Quale Tool and Die also sold $500,000 in aluminum cans to Country Cola, Inc., (another company headquartered in Tera Haute). The cans had been produced at Quale Tool and Die’s Tera Haute plant in 1994. *Country Cola, Inc. filled all of the aluminum cans with cola at its Tera Haute plant, and sold $800,000 in Country Cola to the consumers of Tera Haute. *The city of Baye, the capital of Tera Haute, purchased $100,000 in new hats for its tax collectors (public employees). The hats were produced in Tera Haute during 1995. * Quale Tool and Die produced $700,000 in ceramic pots at its foreign plant, located in Canada. The pots were imported into Tera Haute where consumers purchased all the pots. * Pet Rock, LTD produced $200,000 in Pet Rocks at its Tera Haute plant and exported all $200,000 to Brazil. Given all this, please use the expenditures approach to calculate the nominal GDP for Tera Haute for 1995, as well as the 5 individual components of: consumption, investment, government spending, exports and imports, all in nominal terms. (HINT: Go through each transaction and first decide if it is included in GDP, then decide which component(s) of GDP are affected. Total personal consumption was $ Total Investment was $ Total Government Expenditures was $ Total Exports was $ Total Imports was -$ Total Gross Domestic Product was $ During 1995, the following economic activities took place in the small country of Tera Haute: *Quale Tool and Die, a company headquartered in Tera Haute, produced $2,000,000 in new aircraft parts at its Tera Haute plant; however, none of these parts were sold. *Quale Tool and Die also sold $500,000 in aluminum cans to Country Cola, Inc., (another company headquartered in Tera Haute). The cans had been produced at Quale Tool and Die’s Tera Haute plant in 1994. *Country Cola, Inc. filled all of the aluminum cans with cola at its Tera Haute plant, and sold $800,000 in Country Cola to the consumers of Tera Haute. *The city of Baye, the capital of Tera Haute, purchased $100,000 in new hats for its tax collectors (public employees). The hats were produced in Tera Haute during 1995. * Quale Tool and Die produced $700,000 in ceramic pots at its foreign plant, located in Canada. The pots were imported into Tera Haute where consumers purchased all the pots. * Pet Rock, LTD produced $200,000 in Pet Rocks at its Tera Haute plant and exported all $200,000 to Brazil. Given all this, please use the expenditures approach to calculate the nominal GDP for Tera Haute for 1995, as well as the 5 individual components of: consumption, investment, government spending, exports and imports, all in nominal terms. (HINT: Go through each transaction and first decide if it is included in GDP, then decide which component(s) of GDP are affected. Total personal consumption was $ Total Investment was $ Total Government Expenditures was $ Total Exports was $ Total Imports was -$ Total Gross Domestic Product was $

Explanation / Answer

Ans

Personal consumption is 800000

Total investment=2000000

Total Govt expenditure=100,000

Total exports =200000

Total imports=700000

Total gdp=c+i+G+E-m=2400000

Note output of previous year us not included in Gdp

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