One Bag of Flour Is Sold for $1

question 50

Multiple Choice

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?

• A) GDP increases by $2.00.
• B) GDP increases by $3.00.
• C) GDP increases by $5.00.
• D) GDP increases by $6.00.

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Definitions:

Euros

The official currency used by the countries of the Eurozone.

Portfolio Investment

In international finance, investment in the securities of a foreign company or government.

French Company

A business entity that is registered and operates within France or is formed under French law.

Indirect Quote

An exchange rate expressed as the amount of foreign currency one unit of domestic currency can buy.