PRC-3 · Chapter 13 · Question 16 of 50
A farmer sells wheat to a miller for Rs. 100. The miller turns it into flour and sells it to a baker for Rs. 150. The baker makes bread and sells it to a consumer for Rs. 200. To avoid 'double counting', what is the total contribution to GDP?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 200
Explanation
To avoid double counting, GDP only counts the value of the final good sold to the end consumer (Rs. 200), or alternatively, sums the 'value added' at each stage (100 + 50 + 50 = 200).
More National Income and Its Determination MCQs
- Q18According to the macroeconomic circular flow model, an economy is strictly in equilibrium when:
- Q19While GDP is heavily used to measure a country's success, critics argue it is a poor measure of the true 'standard of living'. Which…
- Q20According to Keynesian theory, the Long-Run Aggregate Supply (LRAS) curve eventually becomes perfectly vertical. What economic state does…
- Q21According to aggregate economic theory, what specifically causes the short-run aggregate supply (SRAS) curve to shift to the left?
- Q22Which crucial macroeconomic indicator measures the total market value of all final goods and services produced within the geographic…