Question

Suppose an economy produces two goods: Apple and Banana. Calculate Nominal GDP and Real GDP by taking 2015 as a base year.

Prices and Quantities
Year	Price of Apple	Quantity of Apple	Price of Banana	Quantity of Banana
2015	$2	100	$3	50
2016	$3	150	$4	100
2017	$4	200	$5	150

Answer 1

Nominal GDP

It is equal to the sum of current prices multiplied by current quantities of all goods

2015 - ($2x100) + ($3x50) = $200 + $150 = $350

2016 - ($3x150) + ($4x100) = $450 + $400 = $850

2017 - ($4x200) + ($5x150) = $800 + $750 = $1550

Real GDP

It is equal to the sum of base year prices multiplied by current quantities of all goods

So 2015 is the base year

2015 - ($2x100) + ($3x50) = $200 + $150 = $350

2016 - ($2x150) + ($3x100) = $300 + $300 = $600

2017 - ($2x200) + ($3x150) = $400 + $450 = $850