Explain why total spending on T-shirts in the previous question is also equal to the total incomes
Question:
Explain why total spending on T-shirts in the previous question is also equal to the total incomes earned in the economy. there are two sides to every transaction.
Data from in previous question
Consider an economy which produces and sells, among a host of other things, 100 million T-shirts a year. The average T-shirt begins life when a farmer plants seeds she put away last year, waters them, harvests the cotton, then sells the cotton to a mill for $0.75, which sells the fabric to a T-shirt factory for $1.50, which sells the T-shirt to a wholesaler for $5, who sells it to Nordstrom for $10, which finally sells it to you for $17. Determine the impact of T-shirts on annual GDP by calculating the total output of the entire production process. Then compare it to total spending on final T-shirts. What do you notice about the two?
Step by Step Answer:
Principles Of Economics
ISBN: 9781319330156,9781319419769
2nd Edition
Authors: Betsey Stevenson, Justin Wolfers