The bicycle company uses the steel to produce bicycle

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Reference no: EM131380374

1. 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 to a consumer in a grocery store for $2.00. Taking these three transactions into account, what is the effect on GDP?

a. GDP increases by $2.00.

b. GDP increases by $3.00.

c. GDP increases by $5.00.

d. GDP increases by $6.00.

2. A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

a. $150 to GDP.

b. $250 to GDP.

c. between $250 and $400 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle.

d. $400 to GDP.

Reference no: EM131380374

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