1.(10 percent) AMD Processors has a factory in Kamloops. During 2008. AMD built $2 million worth of computer chips. AMD's costs are labour, $1 million, interest on debt $100,000; and taxes, $200,000. AMD sells all its output to Pacific Computers. Using AMD's chips, Pacific Computers builds four supercomputers at a cost of $800,000 each (using $500,000 worth of chips, $200,000 in labour costs, and $100,000 in taxes per supercomputer). Pacific Computers sells three of the computers for $1 million each; but at the end of 2008, it had not sold the fourth. The unsold supercomputer was carried on Pacific Computers' books as an $800,000 increase in inventory.

a.Calculate the contribution to GDP of these transactions, showing that all three approaches give the same answer.

b.Repeat part (a), but now assume that in addition to its other costs, AMD also paid $500,000 for imported raw materials for their computer chips.