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Consider an economy that consists of a coal producer, a steel producer, and some households. In a given year, the coal producer makes 15 tons of coal and sells it at $5 per ton. The coal producer pays $50 in wages to households. The steel producer uses 25 tons of coal as an input to production, all purchased at $5 per ton. Of this, 15 tons are from the domestic coal producer and 10 tons are imported. the steel producer makes 10 tons of steel and sells it at $20 per ton. Domestic households buy 8 tons and 2 tons are exported. the steel producer pays $40 in wages. All profits made by domestic producers go to domestic households.
a. Calculate GDP using each of the three approachesb. Calculate the current account surplus and GNP. If the coal producer is instead owned by foreigners, what is GNP?
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