Consider an economy with a cornproducer, someconsumers, and a government. In a givenyear, the corn producer grows 13 million tonnes ofcorn, and the market price for corn is $20 per tonne. Of the 13 million tonnesproduced, 8 million tonnes are sold toconsumers, 2.5 million are stored ininventory, and 2.5 million are sold to the government to feed the army. The corn producer pays $90 million in wages to consumers and $25 million in taxes to the government. Consumers pay $5 million in taxes to thegovernment, receive $5 million in interest on the governmentdebt, and receive $10 million in Canada Pension Plan payments from the government. The profits of the corn producer are distributed to consumers.

a. Calculate GDP

using(i) the product approach

, (ii) the expenditure approach

, and(iii) the income approach

.

(i) Using the productapproach, the value added

by the corn producer is $

million, the value added by other entities is $

million, and GDP in this economy is $

million.

(ii) Using the expenditureapproach, C=$

million, I=$

million, G=$

million, NX=$

million, and GDP in this economy is $

million.

(iii) Using the incomeapproach, after-tax profits for the corn producer are $

million, total wage income is $

million, taxes less subsidies on products and factors of production are $

million, and GDP in this economy is $

million.

b. Private disposable income

is $

million.

Private sector saving

is $

million.

Government saving

is $

nothing

million. The government budget is (in surplus.

not in surplus or deficit. in deficit.)

National saving

is $

million.