Question

Consider the following information about a simple country that produces two different goods: Year PriceMilk QuantityMilk Price Cereal Quantity Cereal 2014 $4 100 $5 120 2015 $4.50 150 $5.50 180 2016 $5 200 $6.00 250 Nominal GDP in 2014 was $ ___________ . Nominal GDP in 2015 was $ ____________. Nominal GDP in 2016 was $ ____________. Enter numbers rounded to two decimal places as necessary. Assume the base year was 2014.

Answer 1

Answer:

Nominal GDP in 2014 was $1000

Nominal GDP in 2015 was $1665

Nominal GDP in 2016 was $2500

Explanation:

Nominal GDP is the market value of goods and services produced in an economy, un-adjusted for inflation.

NGDP= Q x P

Where

Q= quantity

P= price

Nominal GDP in 2014

NGDP(2014)=$4x 100+ $5 x120

NGDP(2014)=$1000

Nominal GDP in 2015

NGDP(2015)= $4.50x 150+ $5.50x 180

NGDP(2015)=$1665

Nominal GDP in 2016

NGDP(2016)= $5x 200 +$6.00x 250

NGDP(2016)= $2500