A company's wages and salaries are part of its value added. Suppose, however, that the cleaning and
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A company's wages and salaries are part of its value added. Suppose, however, that the cleaning and machinery maintenance that its own employees used to do are now contracted out to specialist firms who come in to do the same work more cheaply.
a. What happens to the company's value added when it "contracts out" such work?
b. What happens to value added in the economy as a whole?
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