$$\begin{array} { | c | c | c | }
\hline \text { Year } & \text { Units of Output } & \text { Price Per Unit } \
\hline 1 & 20 & \$ 4 \
\hline 2 & 25 & 4 \
\hline 3 & 30 & 6 \
\hline
\end{array}$$ Assume an economy that is producing only one product. Output and price data for a three-year period are shown in the table. If year 2 is chosen for the base year, in year 3 nominal GDP and real
GDP, respectively, are
A) $180 and $30.
B) $30 and $5.
C) $180 and $120.
D) $120 and $100.

Question

$$\begin{array} { | c | c | c | } 
\hline \text { Year } & \text { Units of Output } & \text { Price Per Unit } \
\hline 1 & 20 & \$ 4 \
\hline 2 & 25 & 4 \
\hline 3 & 30 & 6 \
\hline
\end{array}$$ Assume an economy that is producing only one product. Output and price data for a three-year period are shown in the table. If year 2 is chosen for the base year, in year 3 nominal GDP and real
GDP, respectively, are
A) $180 and $30.
B) $30 and $5.
C) $180 and $120.
D) $120 and $100.

Quizplus · Accepted Answer

Nominal GDP for year 3 is calculated by multiplying the units of output by the price per unit in year 3: 30 units * $6/unit = $180. Real GDP for year 3, using year 2 as the base year, is calculated by multiplying the units of output in year 3 by the price per unit in year 2 (the base year): 30 units * $4/unit = $120.

Assume an Economy That Is Producing Only One Product