Question

For the first ten questions, you'll use the following data. It will be repeated for your convenience each time.

The following is production data:

Year	Waffles (Quantity)	Waffles (Price)	Orange Juice (Quantity)	Orange Juice (Price)	Toaster Ovens (Quantity)	Toaster Ovens (Price)
2010	1000	$1.20	400	$5	280	$22
2011	1200	$1.30	410	$6	300	$25
2012	1500	$1.40	420	$7	300	$28

The above, like I said, is production data. Consumption data is as follows: the average citizen consumes 80 waffles, 20 units of orange juice and 10 toaster ovens. 2010 is the base year for all calculations.

Carefully following all directions for entering your answer, tell me nominal GDP for 2011 for this economy.

Answer 1

Nominal GDP is the value of all the goods and services produced in a given year. It is calculated by multiplying the prices in the current year of all the goods with the quantity produced of all the goods in the current year.

So,

Nominal GDP for 2011 = (price of waffles in 2011 x quantity produced of waffles in 2011)

+ (price of orange juice in 2011 x quantity produced of orange juice in 2011)

+ (price of toaster ovens in 2011 x quantity produced of toaster ovens in 2011)

Nominal GDP in 2011 = (1.3 x 1200) + (6 x 410) + (25 x 300)

Nominal GDP in 2011 = 1560 + 2460 + 7500

Nominal GDP in 2011 = $11,520 is the answer.