One Bag of Flour Is Sold for $1

question 61

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 for $1 to a grocery store who sells it to a consumer for $2.00.Taking these four transactions into account,what is the effect on GDP?

• A)GDP increases by $3.00.
• B)GDP increases by $5.00.
• C)GDP increases by $6.00.
• D)GDP increases by $7.00.