Bob's Barber Shop gave 3,000 haircuts in the year 2011 and 3,100 in the year 2012.The price of a haircut was $7 in 2011 and $8 in 2012.If the year 2011 is the base year,what was Bob's contribution to nominal GDP in the year 2011?
A) $21,000.
B) $21,700.
C) $24,000.
D) $24,800.
E) $25,000.

Question

Quizplus · Accepted Answer

Nominal GDP is calculated by multiplying the quantity of goods and services produced by their current market price. In this case, in 2011, Bob's Barber Shop produced 3,000 haircuts at a price of $7 per haircut, so their contribution to nominal GDP in 2011 was 3,000 x $7 = $21,000.

Bob's Barber Shop Gave 3,000 Haircuts in the Year 2011