Describe briefly how the final value of an iPhone must be equal to the sum of incomes generated by the production of the iPhone
What will be an ideal response?
Consider the value of an iPhone which costs $200. Part of the $200 goes to Apple in the form of profit. Part of the $200 goes to the firms that sold Apple the parts that made up the iPhone. Part of the $200 goes to the workers that built the iPhone. A portion of the $200 goes to pay the sales clerk who sells the iPhone. Part of the $200 goes to the trucking company that shipped the iPhone. In fact, all of the value of the $200 ends up as income for someone in the economy. If we extend this idea to the entire economy and add up the value of all goods and services, then the total will equal the total amount of income in the economy.
You might also like to view...
Refer to Figure 9-2. With the tariff in place, the United States
A) imports 16 million pounds of rice. B) imports 15 million pounds of rice. C) imports 9 million pounds of rice. D) exports 31 million pounds of rice.
Which of the following is a reason why increases in the price level result in a decline in aggregate expenditure?
A) Price level increases in the United States relative to other countries raise net exports, which lowers aggregate expenditure. B) As the price level rises, government spending falls, which lowers aggregate expenditure. C) Price level increases cause firms and consumers to hold more money, which raises the interest rate. Higher interest rates lower consumption and planned investment expenditures, which lowers aggregate expenditure. D) Price level increases raise real wealth, which causes consumption spending and aggregate expenditure to decline.