Question

Assume you are studying an economy that produces only one good.

In Year 1, 83 units of output were produced and the (per-unit) price in Year 1 was $23
In Year 2, 136 units of output were produced and the (per-unit) price in Year 2 was $25
In Year 3, 186 units of output were produced and the (per-unit) price in Year 3 was $30

Assume that Year 2 is the base year. Nominal GDP in Year 3 is $_____________.

Answer 1

Answer) When we talk about Nominal GDP,we are talking about all the goods produced in the country in current year and multiply them by current market prices,this is different from Real GDP where we use prices of base year for our calculation,since in this question we are asked to calculate nominal GDP of year,we will only take year 3 's good quantity(since there is only 1 good) and multiply it by year 3's per unit price.

Now based on above explanation,Nominal GDP in year 3=Quantity of good produced in year 3*Per unit price of good in year 3=186*$30=$5,580

Thus the correct answer is $5,580.

Answer is complete.Thank you!