Suppose that in 2019 Canada's automobile manufacturers produced 2 million cars priced at $20 000 each; in 2020 they produced 1 million cars priced at $40 000 each.Ceteris paribus,the change in nominal national income is
A)a decrease because fewer cars were produced.
B)an increase because the price of each car increased.
C)insufficient information to know.
D)no change in nominal national income.
E)an increase because of inflation.

Question

Quizplus · Accepted Answer

The nominal national income remains the same because in both years the total value of cars produced is $40 billion (2019: 2 million cars * $20,000 = $40 billion; 2020: 1 million cars * $40,000 = $40 billion).

Suppose That in 2019 Canada's Automobile Manufacturers Produced 2 Million