Question

Hogwarts is a small nation. Its population total is 500, and it has 300 wage earners who

earn an average of $100 per year. Each wage earner spends a total of $90 per year
buying goods and services of which $5 goes to buying imported goods. The nation
exports a total of $2000 worth of goods. The Government tax rate is 10% and all
government money is spent on building infrastructure and supporting schools. There is
only one industry (magical products) in the nation and it employs every wage earner. The
industry spends $900 each year on magic wands.
What is your consumer spending (C) ?
What is your investment (1)?
What is your government spending (G)?
I
What is your export income (X)?
What is your import cost (M)?
What is the GDP?

Answer 1

Consumer spending (C) in Hogwarts is $27,000, Investment (I) is $900, Government spending (G) is $3,000, Export income (X) is $2,000, Import cost (M) is $1,500, and the GDP is $31,400.

Step-by-step explanation:

We have a small nation called Hogwarts with key economic values provided. With this information, we can calculate the following economic indicators:

• Consumer spending (C) is calculated by multiplying the number of wage earners by their average annual spending: 300 wage earners × $90 spent per year = $27,000.
• 
  Investment (I) is the annual spending on magic wands, which is $900.
• 
  
• Government spending (G) is based on the tax rate and total earnings: 300 wage earners × $100 average earnings per year = $30,000 total earnings × 10% tax rate = $3,000.
• 
  
• Export income (X) stands at $2,000 as given.
• 
  
• Import cost (M) is calculated as $5 spent on imports per wage earner × 300 wage earners = $1,500.
• 
  
• To find the Gross Domestic Product (GDP), we use the formula: GDP = C + I + G + (X - M). Plugging in the values we get GDP = $27,000 + $900 + $3,000 + ($2,000 - $1,500) = $31,400.