Homework SourseSuppose the output and prices in an economy are given as fol
Suppose the output and prices in an economy are given as follows:
What is the value of real GDP in 2014, measured in base year 2015 prices?
$15,100
$28,550
$11,000
$20,500
| Year | Output of computers | Price of computers | Output of medical care | Price of medical care |
| 2014 | 10 | $100 | 50 | $200 |
| 2015 | 11 | $50 | 70 | $400 |
Solution
2015 prices are base year prices.
Real GDP is value of goods and services at market prices of base year.
Real GDP of 2014=(Output of computer in 2014)(price of computer in 2015)+(output of medical in 2014)(price of medical in 2015)
=10(50)+50(400)=20500
