A farmer grows wheat and sells it to the miller for $109. The miller turns the wheat into flour and sells it to the baker for $154. The baker turns the flour into bread and sells it to consumers for $193. As a result of these transactions, GDP will increase by how much?

To determine the impact of these transactions on GDP, we need to consider the value-added at each step of the production process. GDP is calculated by summing up the value added at each stage of production.

Here's the breakdown:

Farmer:

Sells wheat to the miller for $109.

Value added by the farmer: $109 (since this is the initial production).

Miller:

Buys wheat from the farmer for $109.

Sells flour to the baker for $154.

Value added by the miller: $154 - $109 = $45.

Baker:

Buys flour from the miller for $154.

Sells bread to consumers for $193.

Value added by the baker: $193 - $154 = $39.

Now, we sum up the value added at each stage to find the total increase in GDP:

Total increase in GDP

=

Value added by farmer

+

Value added by miller

+

Value added by baker

Total increase in GDP=Value added by farmer+Value added by miller+Value added by baker

\text{Total increase in GDP} = $109 + $45 + $39 = $193

So, as a result of these transactions, GDP will increase by $193.