Business, 20.02.2020 18:29 albattatasraap5wymy

The expenditure and value-added approaches to calculating GDP arrive at the same final number, but they reach that number in different ways. To illustrate, consider the possible effects of the following set of transactions on GDP:

(1) Manuel pays Awesome Foods Market $1,000 to cater his daughter's engagement party. He's attracted by Awesome Foods Market's guarantee that he'll be happy with the catering, or he'll get his money back.
(2) Awesome Foods Market pays JoAnn's Catering $900 to cater the party.
(3) JoAnn's Catering buys plasticware worth $150 from Kostko.

Compute the contribution to GDP of this set of transactions, using the expenditure approach, i. e., by assuming expenditures of buyers of final goods and services. Assume that Kostko receives the plasticware at no charge and that other costs are zero.

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The expenditure and value-added approaches to calculating GDP arrive at the same final number, but t...

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