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 UnitCorn Bread - 100 - 1.00Software - 550 - $45.00
Production and Prices in Year 2Product - Quantity - Price Per UnitCorn Bread - 125.00 - $1.50Software - 825.00 - $90.00
In Year 2, nominal GDP is equal to:$_ ,and real GDP is $_(enter both responses rounded to the nearest penny ).

Question

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andromache andromache · Answer 1 · 2019-11-12T06:59:43+01:00

Answer:

Nominal GDP is $74,437.50

Real GDP is $37,250

Explanation:

The computation of the nominal GDP is shown below:

Year 2 = Corn bread quantity × corn bread price + Software quantity × software price

= 125 × $1.5 + 825 × $90

= $187.50 + $74,250

= $74,437.50

And, the computation of the real GDP equals to

= Year 1 corn bread price × year 2 corn bread quantity + Year 1 software price × year 2 software quantity

= $1 × 125 + $45 × 825

= $125 + $37,125

= $37,250