Jim produces and sells 1100 worth of flowers Jim uses no int

Jim produces and sells $1100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. What is Jim\'s contribution to GDP? What are Jim\'s profits?

Solution

by income approach of calculating GDP,

GDP = wages paid to workers + interest

= 700+200 = $900

profit = 1100 - 700 - 100 - 200

= $100