Question

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 Unit Bread 110 ​$2.00 Technical Manuals 850 ​$55.00 Production and Prices in Year 2 Product Quantity Price Per Unit Bread 137.50 ​$3.00 Technical Manuals 1 comma 275.00 ​$110.00 In Year​ 2, nominal GDP is equal​ to: ​$ nothing​, and real GDP is

Answer 1

Answer:

Production and Prices in Year 1​(Base year)

Product	Quantity	Price Per Unit
Bread	110	​$2.00
Technical Manuals	850	​$55.00

Production and Prices in Year 2

Product	Quantity	Price Per Unit
Bread	137.50	​$3.00
Technical Manuals	275.00	​$110.00

In year 2, Nominal GDP ($) = Sum of (Current year price x Current year quantity)

= 3 x 137.50 + 110 x 275 = 412.5 + 30,250 = 30,662.50

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

= 2 x 137.50 + 55 x 275 = 275 + 15,125 = 15,400