If hotdogs cost $2 this year and $3 next year, then 100 hotdogs will contribute
A)$200 to this year's nominal GDP and $166 to next year's nominal GDP.
B)$200 to this year's real GDP and $300 to next year's real GDP.
C)the same dollar amount to each year's nominal GDP because hotdogs are intermediate goods.
D)$200 to this year's nominal GDP and $300 to next year's nominal GDP.

Question

Quizplus · Accepted Answer

Nominal GDP is calculated using current prices, so the 100 hotdogs purchased this year will contribute $200 to this year's nominal GDP ($2 per hotdog x 100 hotdogs). Next year, when the price increases to $3 per hotdog, the 100 hotdogs purchased will contribute $300 to next year's nominal GDP ($3 per hotdog x 100 hotdogs).

If Hotdogs Cost $2 This Year and $3 Next Year