Q1. How each of the given events is probable to influence the GDP?
a) Environmental laws forbid the firms from emitting the pollution.
b) Strikes by trade unions.
c) Discovery of new seed raises farm harvest.
Q2. A farmer grows a bushel of wheat and vends it to a miller for Rs. 1.00. The miller turns the wheat into flour and then sells the flour to a baker for Rs. 3.00. The baker employs the flour to make bread and vends the bread to households for Rs. 6.00. The households eat the bread. Determine the value added in each phases of production? Find out the GDP?
Q3. Let consider an economy which comprises only of those who bake bread and those who produce its constituents. Assume that this economy’s production is as shown: 1 million loaves of bread (sold at Rs. 2.00 each); 1.2 million pounds of flour (sold at Rs. 1.00 per pound) and 100,000 pounds each of yeast, sugar and salt (the entire sold at Rs. 1.00 per pound). The flour yeast, sugar and salt are sold just to bakers, who use them completely for the reason of making bread.
a) Compute the total income of economy.
b) Determine the value which is added to the flour, yeast, sugar and salt if the bakers turn to bread?