Question

7. Farmer sells flour to a baker for RM2. The baker uses the flour to make bread, which is sold for RM3. What is the total contribution of these transactions to GDP?

Answer 1

Answer: RM3

Explanation:

Gross domestic product has to do with the monetary value of the goods that are produced in a particular economy. In this case, the total contribution will be RM3 since it's the final amount that the bread is sold.

It should be noted that RM2 in this case is the intermediate good and should therefore bit be included so that there won't be an overstatement of the GDP and to prevent double counting.