2. From Economic table to Circular flow diagram (12 points) The idea of a circular flow diagram was first described by French economist Franois Quesnay in his work "Tableau conomique" (Economic Table) (c. 1750). A slightly modified figure is shown below. Among them, there are three main economic agents: farmers, artisans and proprietor. Farmers: They engage in agricultural activities and produce a product worth 5 billion Francs. They used 2 billion Francs worth of sector output for their own livings. In the figure, it is represented by payments from the agricultural sector to the agricultural sector. Each line represents a flow of 1 billion Francs, with the arrow pointing in the direction of the flow (the same below). The agricultural sector also spends I billion Francs on goods or services from the manufacturing sector produced by artisans, for their own livings. The remaining 2 billion Francs of the total value of the output goes to the proprietor in the form of rent and taxes. Proprietors: they will spend their income of 2 billion Franes, 1 billion Francs on food from the agricultural sector and 1 billion Francs on manufactured goods, both for their own livings. Artisans: They spent I billion Francs of their 2 billion Francs income on food from the agricultural sector and another 1 billion Francs on raw materials from the agricultural sector. The food is used for subsistence and the raw materials are used for the production of manufacturing sector. Farmers Artisans Proprietors (Each line represents the flow of 1 billion Francs, whereas the arrow points to the direction of flow.) (1) Use your knowledge of contemporary economies to draw a new circular flow diagram. Please indicate clearly in the diagram which sectors are included in the firm sector and which sectors are included in the household sector. (2 points) (2) How much is the total output of the economy, i.e. GDP, as in the figure, calculated by the product method? What is the value added of each sector? (2 points) (3) What is the total output of the economy (t.e. GDP) calculated by the income method? Explain how much income each economic agent group carn. (2 points) 2. From Economic table to Circular flow diagram (12 points) The idea of a circular flow diagram was first described by French economist Franois Quesnay in his work "Tableau conomique" (Economic Table) (c. 1750). A slightly modified figure is shown below. Among them, there are three main economic agents: farmers, artisans and proprietor. Farmers: They engage in agricultural activities and produce a product worth 5 billion Francs. They used 2 billion Francs worth of sector output for their own livings. In the figure, it is represented by payments from the agricultural sector to the agricultural sector. Each line represents a flow of 1 billion Francs, with the arrow pointing in the direction of the flow (the same below). The agricultural sector also spends I billion Francs on goods or services from the manufacturing sector produced by artisans, for their own livings. The remaining 2 billion Francs of the total value of the output goes to the proprietor in the form of rent and taxes. Proprietors: they will spend their income of 2 billion Franes, 1 billion Francs on food from the agricultural sector and 1 billion Francs on manufactured goods, both for their own livings. Artisans: They spent I billion Francs of their 2 billion Francs income on food from the agricultural sector and another 1 billion Francs on raw materials from the agricultural sector. The food is used for subsistence and the raw materials are used for the production of manufacturing sector. Farmers Artisans Proprietors (Each line represents the flow of 1 billion Francs, whereas the arrow points to the direction of flow.) (1) Use your knowledge of contemporary economies to draw a new circular flow diagram. Please indicate clearly in the diagram which sectors are included in the firm sector and which sectors are included in the household sector. (2 points) (2) How much is the total output of the economy, i.e. GDP, as in the figure, calculated by the product method? What is the value added of each sector? (2 points) (3) What is the total output of the economy (t.e. GDP) calculated by the income method? Explain how much income each economic agent group carn. (2 points)