Question

Assume that a grower of flower bulbs sells its annual output of bulbs to an Internet retailer for $70,000. The retailer, in turn, brings in $120,000 from selling the bulbs directly to final customers. What amount would these two transactions add to personal consumption expenditures and thus to GDP during the year? Instructions: Enter your answer as a whole number.

Answer 1

Solution:

Answer :

Grower's income = $70,000

Retailer income = $120,000 - $70,000

= $ $50,000

Personal consumption expenditure depends on personal income.

So,

The personal consumption expenditure which will be included in GDP during the year

= retailer's income + grower's income

= $50,000 + $70,000

= $120,000.

Therefore, the personal consumption expenditure which will be included in GDP during the year is $120,000.
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Answer 2

160,000_70,000=90,000 Personal consumption expenditure depends on personal income. GDP during the year. Retailer's income+ growth income. 90,000+70,000=160,000