Question

Wheat is ground into flour, which is sold to make dinner rolls. Which of the following is true?

Options:
a) Wheat is the only intermediate good, and it is not included in GDP.
b) Dinner rolls are the final good, and they are not included in GDP.
c) Wheat and flour are intermediate goods, and they are not included in GDP.
d) Dinner rolls are intermediate goods, and they are included in GDP.

Answer 1

Option c) Wheat and flour are intermediate goods, and they are not included in GDP.

Step-by-step explanation:

The correct answer is option c) Wheat and flour are intermediate goods, and they are not included in GDP.

In the production process of dinner rolls, wheat is ground into flour, which is then used to make the dinner rolls. Both wheat and flour are intermediate goods because they are used to produce the final good, which is the dinner rolls. Intermediate goods are not included in GDP calculations because they would result in double counting. Only the value of final goods and services is included in GDP.