If Harry's Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each. We can conclude that Harry's production of large pepperoni pizzas: B. increased nominal GDP from last year, but real GDP was unaffected.
What is production?
Since nominal GDP is calculated using current prices, the $10 to $12 change in the selling price of the pizzas represents a change in nominal GDP. But when prices just fluctuate, real GDP, which accounts for price changes, stays the same.
Since the pizzas are the same in both years, there hasn't been a difference in the actual output or production quantity. The increased selling price per pizza is what caused the nominal GDP to increase, but real GDP stays the same because there has been no change in the amount produced (real output).
Therefore the correct option is B.
The complete question is:
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.