Question

A farmer grows wheat, which she sells to a miller for $70. The miller turns the wheat into flour, which she sells to a baker for $120. The baker turns the wheat into bread, which she sells to consumers for $135. Consumers eat the bread. Assume that these transactions account for all economic activity in this economy. GDP in this economy is $ . Value added is defined as the value of a producer's output minus the value of the intermediate goods that the producer buys to make the output.

Answer 1

$135

Step-by-step explanation:

Gross domestic product is the sum of the final goods and services produced in an economy within a given period which is usually a year

It is only final goods that are included in the calculation of GDP. that value is $135

GDP calculated using the expenditure approach :

GDP = Consumption spending + Business spending + Investment spending + Government spending + Net export