Reference no: EM13951699
1. The following transactions occurred in a given year. Firm A manufactures leather using a factory valued at $20,000. Suppose Firm A produced $2,000 worth of leather and incurred the following costs: $1,000 for the salaries of workers, $100 for interest payments on a bank loan, and taxes of $200. Firm A sold all of its leather to Firm B, which is a manufacturer of luxury bags. Suppose Firm B produced four bags at a cost of $800 each.
The cost of each bag consisted of paying for $500 worth of raw materials, paying for the salaries of workers for $200, and $100 in taxes. Firm B has a factory valued at $30,000. Firm B sold to the public three of its four bags for $1,000 each. Calculate the contribution
to GDP using the following:
1) Production approach.
2) Income approach.
3) Expenditure approach
2 . Consider a two-good (A and B), two-period (year 1 and year 2) economy. In year 1, the economy produced 10 units of A at a per unit price of $1 and 5 units of B at a per unit price of $2. In year 2, the economy produced 15 units of A at a per unit price of $1 and 5 units
of B at a per unit price of $3. Calculate real GDP for years 1 and 2 using the following methods:
1) Laspeyres.
2) Paasche.
3) Fisher.
4) Calculate and compare the growth rate of real GDP using the three approaches.
3. Mankiw, page 42, question 2. A farmer grows a bushel of wheat and sells it to a miller for $1. The miller turns the wheat into flour and then sells the flour to a baker for $3. The baker uses the flour to make bread and sells the bread to an engineer for $6. The engineer eats the bread.
1) What is the value added by each person?
2) What is the bread's contribution to GDP?
4. Mankiw, page 42, question 3. Suppose a woman marries her butler. After they are married, her husband continues to wait on her as before, and she continues to support him as before (but as a husband rather than an employee).
1) How does the marriage affect GDP? (Note: That is, the butler is treated as a husband, not as an employee)
2) How should it affect GDP? (Note: That is, the butler is treated as an employee, not as a husband)
|
Description of the environmental problem of water scarcity
: a description of the environmental problem of water scarcity. Then, based on the core principles of the Ecological Model, explain how the multiple levels of influence contribute to the problem and interact with each other.
|
|
Prepare a schedule of note discount amortization
: On December 31, 2010, Green Company finished consultation services and accepted in exchange a promissory note with a face value of $400,000, a due date of December 31, 2012, and a stated rate of 5%, with interest receivable at the end of each year. D..
|
|
Government bond with a yield
: Two years ago, Mathew purchased a 10 year government bond with a yield of 4.75%. Today, the 23) interest rate on government bonds with 8 years to maturity is 3.5%. If Mathew sells his bond today, he most likely will
|
|
Write about assessment of the implications for the marketers
: Write about: An assessment of the implications for the marketers
|
|
Calculate and compare the growth rate of real gdp
: 1. The following transactions occurred in a given year. Firm A manufactures leather using a factory valued at $20,000. Suppose Firm A produced $2,000 worth of leather and incurred the following costs: $1,000 for the salaries of workers, $100..
|
|
What is the after-tax salvage value of the asset
: An asset used in a four-year project falls in the five-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $8,900,000 and will be sold for $1,930,000 at the end of the project. Required: If the tax rate is 30 percent..
|
|
Working with two factor portfolios
: Suppose you are working with two factor portfolios, portfolio 1 and portfolio 2. The portfolios have expected returns of 15% and 6%, respectively. Based on this information, what would be the expected return on well-diversified portfolio A, if A has ..
|
|
Decline linearly over the next six years to constant rate
: You are valuing a toy store with a current growth rate of 18.2% which is expected to decline linearly over the next six years to constant rate of 4.1%. Similar firms have a current required rate of 9.6%. What is the value today if its current dividen..
|
|
What is the required return for stock
: Target is expected to pay a dividend in year 1 of $2.11, a dividend in year 2 of $4.96, and a dividend in year 3 of $6.24. After year 3 dividends are expected to grow at the rate of 8% per year. Currently, target has a beta of 1.25, and the market pr..
|