Problem: Consider a simple economy that produces three different goods: wood, barrels, and whiskey. The saw mill pays its workers €200,000 to produce nicely cut wood. It sells its total output for €600,000. The cooper (barrel-maker) purchases wood worth €80,000 and pays her workers €500,000 to produce oak barrels. All the barrels are sold for €750,000 to the distiller, who uses the barrels to produce whiskey. The whiskey is then sold for €1,600,000. The distiller (a very nice old guy) pays his sole employee €200,000. Calculate GDP (show your calculations in as much detail as possible!) using
a. The value-added approach
b. The final goods approach