Question

Assume the economy of country C produces hotdogs and buns in the following quantities and prices in 2016 and 2017. Assume also that 2016 is the base year and the real GDP will be calculated using 2016 prices. What is the real GDP 2017? Hot Dogs Buns Quantity Price Quantity Price Year 2016 (base year) 6 million $2 4 million $1 Year 2017 8 million $3 6 million $2 a. $22 million. b. $26 million c. $16 million. d. $36 million.

Answer 1

Option (a).

Step-by-step explanation:

According to the scenario, computation of the given data are as follow:-

Real GDP = Base Year Price × Current Year Quantity

Real GDP in 2016= $2 × 6 million + $1 × 4 million

= $12 million + $4 million = $16 million

Real GDP in 2017 = $2 × 8 million + $1 × 6 million

= $16 million + $6 million = $22 million

According to the analysis, the real GDP in 2017 is $22 million. So (a) option is correct.