Question

table

	2002		2007
product	quantity	price	quantity	price
movies	20	$6	30	$7
burgers	100	$2	90	$2.50
bikes	3	$1,000	6	$1,100

1)Suppose that a very simple economy produces three goods: movies, burgers, 20) and bikes. Suppose the quantities produced and their corresponding prices for 2002 and 2007 are
shown in the table above. What is nominal GDP in 2007?
A) $7,035 B) $6,360 C) $3,320 D) $3,690

2) Suppose that a very simple economy produces three goods: movies, burgers, 21) and bikes. Suppose the quantities produced and their corresponding prices for 2002 and 2007 are
shown in the table above. What is nominal GDP in 2002?
A) $6,360 B) $3,320 C) $7,035 D) $3,690

3)Suppose the quantities produced and their corresponding prices for 2002 and 2007 are
shown in the table. What is real GDP in 2007, using 2002 as the base year?
A) $3,690B) $6,360 C) $3,320D) $7,035

Answer 1

Question 1: /Answer:

Nominal GDP is the total value of output in an economy in term of current price level.

So Nominal GDP for 2007 would be,

30*7+90*2.50+6*1100 = 210+225+6600= $7035

So correct option is A.

Question 2/ Ans:

Similar to the question 1 we can calculate this for year 2002,

20*6+100*2+3*1000 = 120+200+3000= $3320

So our correct option is B.

Question 3/ANS:

Real GDP : Real GDP is the total value of output in an economy in term of base year's price level(2002).

30*6+90*2+6*1000 = 180+180+6000= $6360

So our correct option is B.