Answer :
Answer:
GDP will increase by $193.
Explanation:
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.
