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A simple economy produces two goods, Apple Pies and Software. Price and quantity data are as follows: Production and Prices i

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Answer #1

In year 2, nominal GDP=Price*quantity of year 2

Nominal GDP=125*3.75+1275*90=115218.75

Real GDP is the goods and services produced in year 2 but valued at year 1 prices

Real GDP=125*2.5+1275*45=57687.5

Thus Real GDP=$57687.5

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