1. Assume an economy has two firms. Firm A produces wheat and firm B produces bread. In a given year, firm A produces 5,000 tonnes of wheat, sells 3,000 tonnes to firm B at $30 per tonne, exports 1,500 tonnes at $30 per tonne, and stores 500 tonnes as inventory. Firm A pays $40,000 in wages to consumers. Firm B produces 60,000 loaves of bread, and sells all of it to domestic consumer at $2 per loaf. Firm B pays consumers $60,000 in wage. In addition to the 60,000 loaves of bread consumers buy from firm B, consumers import and consume 20,000 loaves of bread at $1 per loaf. Calculate GDP using (a) the product approach, (b) the expenditure approach, and (c) the income approach.2. Suppose an economy produces three goods: apple, orange, and banana. In 2015, the economy produces 1000 tonnes of apples, 2000 tonnes of oranges, and 3000 tonnes of banana, and the market prices (in 2015 dollars) are $3 per tonne, $2 per tonne, and $1 per tonne, respectively. In 2016, the production is 2000 tonnes for all three goods, and the market price (in 2016 dollars) is $2 per tonne for all goods. Now compute (a) real GDP for 2015 and 2016, using 2015 as the base year; (b) a GDP deflator from 2015 to 2016, using again 2015 as the base year.3. Briefly explain how each of the following events is likely to affect real GDP. Do you think the changes in real GDP reflects a similar change in economic well-beings?(a) A hurricane in Ontario forces Canada's Wonderland to shut down for a month.(b) The government passes new environmental laws that prohibit firms from using production methods that emit large quantities of pollution.(c) More high-school students drop out of school to take jobs mowing lawns.(d) Fathers around the country reduce their workweeks to spend more time with their children.4. Consider the Malthusian Growth Model. The production function is Y = LαN1−α, where L is fixed stock of land, N is current population, and 0 < α < 1 . The1population follows the following dynamics,N0 = Ncβ,where N0 is next period population, c is current consumption per capita, and 0 < β < 1.(a) Find the size of population in steady state.(b) Suppose a natural disaster kills half of the steady state population. What happens to population and per capita consumption in the short run? In the long run?2