Suppose there are only two firms in an economy: Rolling Rawhide produces rawhide and sells it to Chewy Chomp, Inc, which uses the rawhide to produce and sell dog chews. With each $1 worth of rawhide that it buys from Rolling Rawhide, Chewy Chomp, Inc produces a dog chew and sells it for $2.50 . Neither firm had any inventory at the beginning of 2014 . During that year, Rolling Rawhide produced
enough rawhide for 2000 dog chews. Chewy Chomp, Inc bought 90% of that rawhide for $1800 and promised to buy the remaining 10% for $200 in 2015 . Chewy Chomp, Inc produced 1800 dog chews during 2014 and sold each one during that year for $2.50 . What was the economy's GDP for 2014?
a. $3,800
b. $4,500
c. $4,700
d. $5,000
c
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In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, a ________ in the reserve requirement ________ the demand for reserves, raising the federal funds interest rate,
everything else held constant. A) rise; decreases B) rise; increases C) decline; increases D) decline; decreases
Households make their savings available to borrowers through
a. resource markets b. the loanable funds market c. the labor market d. the taxes e. spending