A simple economy produces two goods, Bread and Technical Manuals. Price and quantity data are as follows:Production and Prices in Year 1 (Base year) Product Quantity Price Per UnitBread 120 $3.00Technical Manuals 800 $50.00Production and Prices in Year 2Product Quantity Price Per UnitBread 150 $4.50Technical Manuals 1,200 $100.00In Year 2, nominal GDP is equal to: _, and real GDP is _ (enter both responses rounded to the nearest penny).

Question

Elizabeth Oneill

Business

26 June, 18:47

A simple economy produces two goods, Bread and Technical Manuals. Price and quantity data are as follows:Production and Prices in Year 1 (Base year) Product Quantity Price Per UnitBread 120 $3.00Technical Manuals 800 $50.00Production and Prices in Year 2Product Quantity Price Per UnitBread 150 $4.50Technical Manuals 1,200 $100.00In Year 2, nominal GDP is equal to: _, and real GDP is _ (enter both responses rounded to the nearest penny).

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Answers (1)

Know the Answer?

Jamarcus Garza · Answer 1

Answer: (1) 120,675

(2) 60,450

Explanation:

(1) Nominal GDP, year 2 ($) = Sum of (Year 2 price * Year 2 quantity)

= 150 * 4.50 + 1,200 * 100

= 675 + 120,000

= 120,675

(2) Real GDP, year 2 ($) = Sum of (Year 1 price x Year 2 quantity)

= 3 * 150 + 50 * 1200

= 450 + 60,000

= 60,450