If a landowner cuts trees and sells them to the mill for $500 and the mill cuts these trees into wood boards and sells them to the builder for $800. Finally, the builder uses these boards to make tables which he sells for $1400 to Villagers.

a) How much is the value of total output if we correctly compute the total value added?

b) However, if we simply added up the value of all transactions we would get what value?

c) Use the table below to calculate the GDP from the expenditure side.

Gross investment expenditure

$402.00

Wages and salaries

$1741.00

Consumption expenditure

$1302.40

Interest and investment income

$99.40

Business profits

$70.40

Depreciation

$199.20

Government purchases

$486.80

Net exports

$94.00