Question

A simple economy produces two goods, Corn BreadCorn Bread and SoftwareSoftware.

Price and quantity data are as follows:



Production and Prices in Year 1 (Base year)



Product



Quantity



Price Per Unit



Corn Bread



100



1.00



Software



550



$45.00



Production and Prices in Year 2



Product



Quantity



Price Per Unit



Corn Bread



125.00



$1.50



Software



825.00



$90.00



In Year 2, nominal GDP is equal to:$_____________ ,and real GDP is $_____________(enter both responses rounded to the nearest penny ).

Answer 1

Consider the calculations below

Step-by-step explanation:

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

= 125 x 1.5 + 825 x 90

= 187.5 + 74,250

= 74,437.50

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

= 1 x 125 + 45 x 825

= 125 + 37,125

= 37,250.00