# Given a simple economy which only produces computers, apples, and furniture, consider the...

## Question:

Given a simple economy which only produces computers, apples, and furniture, consider the following outputs and prices for the years 1990 and 2005:

 1990 2005 Quantity Price Quantity Price Computers 20 10 30 20 Apples 10 20 20 20 Furniture 30 10 0 5 Popcorn 10 20 10 50 Phones 50 10 20 100

A) What is the 1990s nominal GDP?

B) What is the 2005 nominal GDP?

C) What is the 2005 real GDP, measured in 1990s dollars?

D) What is the 1990 real GDP, measured in 2005 dollars?

## Real GDP and Nominal GDP:

Real GDP is the value of Gross Domestic Product valued at the base year prices. On the other hand, the nominal GDP is the value of Gross Domestic Product evaluated at the current year prices.

A)

The 1990 nominal GDP = Quantity in 1990 * price in 1990

The 1990 nominal GDP = (20 * 10) + (10 * 20) + (30 * 10) + (10 * 20) + (50 * 10) =...

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