Below are some data from the land of milk and honey: Year Price of Milk Quantity of Milk Price of Honey Quantity of Honey 2016 $1 100 quarts $2 50 quarts 2017 1 200 2 100 2018 2 200 4 100 What are the nominal and real GDP of 2017? ~ $200: $400 ~ $400: $400 ~ $800: $400 “ $800; $800

Economics Mar 12, 2021

Below are some data from the land of milk and honey:
Year Price of Milk Quantity of Milk Price of Honey Quantity of Honey
2016 $1 100 quarts $2 50 quarts
2017 1 200 2 100
2018 2 200 4 100

What are the nominal and real GDP of 2017?

~ $200: $400

~ $400: $400

~ $800: $400

“ $800; $800

Expert Solution

Computation of Nominal GDP of 2017:

Nominal GDP = Sum of price of a good in the current year * Quantity of good in the current year

Nominal GDP = (1*200) + (2*100)

= 200 + 200

Nominal GDP = 400

Computation of Real GDP of 2017:

Real GDP = Sum of price of a good in the base year * quantity if good in the current year

= (1*200) + (2*100)

= 200 + 200

Real GDP = 400

So, the correct option is 2nd "400, 400".

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