Question

Harry's Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each. This year Harry's again produced 10,000 large pepperoni pizzas (identical to last year's pizzas) but sold them for $12 each. Based on this information we can conclude that Harry's production of large pepperoni pizzas:A. increased both nominal and real GDP from last year.B. increased nominal GDP from last year, but real GDP was unaffected.C. increased real GDP from last year, but nominal GDP was unaffected.D. did not change either nominal or real GDP from last year.

Answer 1

The answer is: B. increased nominal GDP from last year, but real GDP was unaffected.

Step-by-step explanation:

Nominal GDP includes the total production of final and legal goods and services at current prices.

So Harry's Pizzas will increase the nominal GDP ($120,000 ˃ $100,000) but since we do not know the inflation rate, we can not determine how the real GDP was affected.