Homework SourseSuppose that in 2011 a country produces 20 computers at a pr
| Suppose that in 2011 a country produces 20 computers at a price of $2,000 each and 4 cars at a price of $ 5,000 each. In 2012 a country produces 15 computers at a price of $ 3,000 each and 5 cars at a price of $ 6,000 each. What do we know has happened? | |||||||||||||
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| Suppose that in 2011 a country produces 20 computers at a price of $2,000 each and 4 cars at a price of $ 5,000 each. In 2012 a country produces 15 computers at a price of $ 3,000 each and 5 cars at a price of $ 6,000 each. What do we know has happened? | |||||||||||||
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Solution
Nominal GDP in 2011= price of computers*number of computers produced + price of cars*number of cars produced
= 2000*20 + 4*5000
= 40000+20000
= 60000
Nominal GDP for 2012= 3000*15 + 6000*5
= 45000+30000
=75000
So nominal GDP has increased.
Real GDP is the output that is produced i.e., the number of computers and cars. In 2011, 24 units are produced in total. In 2012, 20 units (15+5) units were produced in total. So real GDP has deceased. So option (a) is correct.
