In Calculating GDP by the Expenditure Method,there Are Two Ways

question 169

Essay

In calculating GDP by the expenditure method,there are two ways to avoid the double counting of intermediate goods.Demonstrate your understanding of these two methods by showing how both produce the same calculation of contribution to GDP.Assume the following: 1)Iron ore is produced by iron mining,which is sold to steel makers for $30 million (we will make the simplifying assumption that iron mining uses no intermediate goods).2)The iron ore is all used to make steel,which is sold to automobile makers for $100 million.3)The steel is all used to make automobiles,which are sold to dealers for $250 million.4)All of the automobiles are sold by the dealers to consumers for $350 million.What are the two methods,and what contribution to GDP can be calculated by each method,from the above assumptions?

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Definitions:

Chemosensory Cells

Specialized cells responsible for detecting chemical signals in the environment, contributing to senses like taste and smell.

Ames Room

An optical illusion room designed to distort perception, making objects appear larger or smaller depending on their location within the room.

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The ability to detect and differentiate the flavors and tastes of various substances.

Supertasters

Individuals with a heightened sense of taste, particularly sensitive to bitter compounds.