Peg's Manicure Manor did 4,000 sets of nails in 2015 and 4,500 sets of nails in 2016. The price of a set of nails was $20 in 2015 and $22 in 2016. If 2015 is the base year, Peg's contribution to real GDP in 2015 was ________ and in 2016 was ________.

Question

Quizplus · Accepted Answer

First note that in order to find Peg's contribution to real GDP, we must use the price of nails in the base years ($20)in both computations. So Peg's contribution to real GDP in the base year, 2015, was 4,000 nails × $20 or $80,000. Similarly, Peg's contribution to real GDP in 2016, was: (4,500 nails × $20)= $90,000.

Peg's Manicure Manor Did 4,000 Sets of Nails in 2015