Assume Country T only produces hamburgers and buns.
Given the information below, what is the value of GDP in Country T?
Nominal GDP is the total value of goods and services produced in a nation, measured using the current year's prices. Absent measurement errors, GDP could be computed using one of three approaches: income approach, expenditure approach or product approach.
Answer and Explanation:
Value of GDP is the sum of the value of the two goods produced. For each good, the value is the quantity times the price of the good. Hence, GDP for country T is:
- Country T GDP = 5 * 2.25 + 5 * 0.75
- Country T GDP = $15
That is, GDP for country T is $15.
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from Economics 102: MacroeconomicsChapter 4 / Lesson 3