$$\begin{array} { | c | c | c | c | }
\hline \text { Year } & \text { Units of Output } & \text { Price of Bagel per Unit } & \text { Price Index } ( \text { Year } 1 = 100 ) \
\hline 1 & 10 & \$ 10 & 100 \
\hline 2 & 12 & 20 & 200 \
\hline 3 & 15 & 30 & 300 \
\hline 4 & 20 & 40 & 400 \
\hline
\end{array}$$ The table contains data for a hypothetical single-product economy. Real GDP in year 4 is
A) $320.
B) $450.
C) $200.
D) $800.

Question

$$\begin{array} { | c | c | c | c | } 
\hline \text { Year } & \text { Units of Output } & \text { Price of Bagel per Unit } & \text { Price Index } ( \text { Year } 1 = 100 ) \
\hline 1 & 10 & \$ 10 & 100 \
\hline 2 & 12 & 20 & 200 \
\hline 3 & 15 & 30 & 300 \
\hline 4 & 20 & 40 & 400 \
\hline
\end{array}$$ The table contains data for a hypothetical single-product economy. Real GDP in year 4 is
A) $320.
B) $450.
C) $200.
D) $800.

Quizplus · Accepted Answer

Real GDP is calculated by dividing nominal GDP by the price index (and then multiplying by 100). For year 4, nominal GDP is 20 units * $40 = $800. The price index is 400, so real GDP = ($800 / 400) * 100 = $200.

The Table Contains Data for a Hypothetical Single-Product Economy