Question

If during 2011 the Republic of Sildavia recorded a value added of $78 billion, wages of $40 billion, profits of $8 billion, and total sales of $90 billion, the value of intermediate goods purchased during 2011 in Sildavia was:

Answer 1

Answer:

$12 billion.

Explanation:

Given: Value added during 2011= $78 billion.

           Total sales= $90 billion.

Intermediate goods are the goods used to produce final product and it is not included in the calculation of GDP, however, it is included in the value of final goods.

Now, finding the value of intermediate goods purchased.

Intermediate goods= $Total\ sales - Total\ value\ added$

⇒ Intermediate goods= $\ 90\ billion - \ 78 \ billion$

∴ Intermediate goods= $\ 12\ billion$

Hence, value of intermediate goods purchased is $12 billion.