Plz add your explanation The table below contains prices and

Plz add your explanation.

The table below contains prices and output for a two good economy. Nominal and real GDP in 2013 are both S33,500. Use the information in the table to answer the following questions. Shirts Pants YearPrice QuantityPriceQuantity 2013 S7.00 500 2014 S10.00 500 $17.50 2000 $12.00 2500 1. What is nominal GDP in 2014? 2. What is real GDP in 2014? Use 2013 as the base year. Number Number 3. Real output from 2013 to 2014 has: O increased. O stayed the same. O decreased O experienced inflation.

Solution

Nominal GDP = Units of output x Price per unit

Real GDP = Units of output x Price per unit from base year

1)

Nominal GDP (2014) = 10 x 500 + 17.5 x 2000 = $40000

2)

Real GDP (2014) = 7 x 500 + 12 x 2000 = $27500

3)

Real output from 2013 to 2014 has decreased. (from $33500 to $27500)