b. In the country of Hypothetica, we have the following information for the year 2015: *Consumption totalled...

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Economics

b. In the country of Hypothetica, we have the followinginformation for the year 2015:
Consumption totalled $2 billion, but 25% of this totalconsisted of goods which were initially sold in 2014.
A total of $250 million worth of new housing stock wassold.
Labour wage income was $150 million. Businesses invested $100million dollars in new capital (i.e. machinery) stock.
Businesses also bought $200 million dollars worth of companyshares on the stock exchange.
Foreigners with working visas living in foreign-only householdsbought $100 million worth of locally made goods and services.
The government spent $500 million building roads.
Hypothetica is a closed economy, thus they are no exports andimports.
(i) Calculate and explain how you obtained the figure (i.e. whatdid you count, and what did you exclude) for Hypotheticaâ€™sconsumption in 2015
(ii) Calculate and explain how you obtained the figure (i.e.what did you count, and what did you exclude) for Hypotheticaâ€™sinvestment in 2015
(iii) What was Hypotheticaâ€™s GDP in 2015 using the expendituremethod? Explain your answer

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4.3 Ratings (588 Votes)

i GDP according to the expenditure method is the sum of consumption expenditure and investment expenditure against the goods and services produced during a given financial year For Hypothetica the total consumption expenditure is given as 2 billion and 25 of the same is against goods and services produced during the previous yearSo to find out the current years See Answer

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