One bag of flour is sold for $1.00 to a bakery,which uses the flour to bake bread that is sold for $3.00 to consumers.A second bag of flour is sold to a consumer in a grocery store for $2.00.Taking these three transactions into account,what is the effect on GDP?

Question

Quizplus · Accepted Answer

The GDP increases by $5.00 because the bread sold to consumers for $3.00 and the flour sold directly to a consumer for $2.00 are both final goods. The flour sold to the bakery is an intermediate good and does not count separately in GDP.

One Bag of Flour Is Sold for $1