Scenario: A country produces only one good. It produced 5,000 units of the good during Year 1 and 6,000 units of the good in Year 2. The price of each unit of the good in Year 1 was $280 and it was $320 in Year 2. Suppose Year 1 is taken as the base year for the calculation of GDP.
-Refer to the scenario above.The nominal GDP of the country in Year 1 was ________.
A) $540,000
B) $280,000
C) $1,400,000
D) $2,200,000

Question

Quizplus · Accepted Answer

Nominal GDP is calculated by multiplying the quantity produced by the price of the good. Therefore, nominal GDP in Year 1 can be calculated as 5,000 units x $280 per unit = $1,400,000.

Scenario: a Country Produces Only One Good