10. Value Added in Various Stages
of Production
10
Stages of Production
Value of
Transactions
Value
Added
1. Farmer grows wheat, sells it to miller $0.12 $0.12
2. Miller converts wheat to flour, sells it to baker 0.28 0.16
3. Baker bakes bagel, sells it to bagel store 0.60 0.32
4. Bagel store sells bagel to consumer 0.75 0.15
Total $1.75 $0.75
28. The Equivalence of Expenditure and
Income
(In billions of dollars)
28
Expenditure Income
C:Consumer goods and
services
Wages and salaries $8,062
$10,057 Corporate profits 1,092
I:Investment in plant,
equipment, and
inventory
Proprietors’ income 1,072
Rents 64
1,994 Interest 929
G:Government goods
and services
Taxes on output and imports 1,034
2,882 Depreciation 1,832
X:Exports 1,859 Miscellaneous 46
M:Imports (2,529) Statistical discrepancy 136
GDP:Total value of output $14,265 = Total value of income $14,265
32. Personal Income
32
PI NI indirect business taxes corporate profits
interest and misc payments
Social Security taxes
transfer payments capital income
= − −
−
−
+ +