Question

Suppose an economy produces only eggs and ham. In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound. In 2010, which is the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. Calculate the value of nominal and real GDP for 2009.

Answer 1

Nominal GDP = $500

Real GDP = $400

Step-by-step explanation:

Gross domestic product is the sum of all final goods and services produced in an economy within a given period which is usually a year.

Nominal GDP is GDP calculated using current year prices.

Real GDP is GDP calculated using base year prices.

Nominal GDP = (100×$3)+(50×$4) = $500

Real GDP = (100 × $1.5) + (50×$5) = $400

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