The table below gives the quantities and prices for 2005 and 2015 for an economy that produces just two goods: sailboats and coconuts.
For this economy that produces just sailboats and coconuts, and with 2005 as the base year, nominal GDP was approximately ________ times larger in 2015 than it was in 2005.
A)1.34
B)1.65
C)1.77
D)2.19

Question

The table below gives the quantities and prices for 2005 and 2015 for an economy that produces just two goods: sailboats and coconuts.   
For this economy that produces just sailboats and coconuts, and with 2005 as the base year, nominal GDP was approximately ________ times larger in 2015 than it was in 2005.
A)1.34 
B)1.65 
C)1.77 
D)2.19

Quizplus · Accepted Answer

Nominal GDP in 2005 was (10 sailboats × $500)+ (2,000 coconuts × $1)= $7,000 and nominal GDP in 2015 was (20 sailboats × $525)+ (2,400 coconuts × $2)= $15,300. So the economy was 2.19 times larger ($15,300 / $7,000)in 2015 in nominal dollars.

The Table Below Gives the Quantities and Prices for 2005