Business Economics

Running head: BUSINESS ECONOMICS
Business Economics
Name of the Student
Name of the University
Course ID

1BUSINESS ECONOMICS
Table of Contents
Question 2........................................................................................................................................2
Question a....................................................................................................................................2
Question b....................................................................................................................................2
Question c....................................................................................................................................2
Question 3........................................................................................................................................3
Question a....................................................................................................................................3
Question b....................................................................................................................................4
Question 4........................................................................................................................................5
Question a....................................................................................................................................5
Question b....................................................................................................................................5
Question c....................................................................................................................................6
Question 5........................................................................................................................................6
Question 6........................................................................................................................................9
Question a....................................................................................................................................9
Question b..................................................................................................................................10
References......................................................................................................................................11

2BUSINESS ECONOMICS
Question 2
Question a
i)
A windscreen purchased by a motor vehicle spare part supplier is an intermediary good. As
windscreen is not used by final consumer rather it is used by vehicle producer as an intermediary
input, this is an intermediate good.
ii)
New bulldozer is a final good as it is directly used by the company.
iii)
Purchase of housing cleaning service is example of final service as the service is directly used by
final consumer.
iv)
Coking coal is an intermediary good mainly used for steel production.
Question b
The nation’s GDP is $800 billion as GDP refers to the market value of all the produced
final goods and services (Goodwin et al., 2015). The unsold stock ($800 - $750) = $50 counts as
inventory investment of the nation.
Question c
The new truck sold for the use by a transport company is a final good because production
of truck is a part of this year production and is therefore adds to the final product of the nation.

3BUSINESS ECONOMICS
As truck is considered as a final good it should be added to GDP because GDP includes
value of all final goods and services.
Question 3
Question a
Difference between demand-pull and cost-push inflation
In an economy price level increases either due to an increase in aggregate demand or due
a decreases in aggregate supply following an increase in production. Inflation caused due to an
increase in aggregate demand is termed as demand-pull inflation while inflation caused due to
increase in cost is termed as cost-push inflation (Heijdra, 2017).
Diagram 1: Demand-pull inflation