suppose that a simple economy produces only the following 4 godsand services: te

Question

suppose that a simple economy produces only the following 4 godsand services: textbooks, hamburgers, shirts and cotten. assume that all the cotten is used in the production ofshirts. Use the information in the following table o caculateNoninal GDP?

product                     quanity        price
textbook                      100          $60.00          
hamburgers                   100          $2.00
shirts                            50             $25.00
cotten                            8000          $.60

Explanation / Answer

Nominal GDP is calculated by adding up the total value of allfinished goods and services produced within a giveneconomy in a given time period. Thus... Nominal GDP = 100*60 + 100*2 + 50*25 = $7450 Cotton is not counted in GDP because it is an input toproduction and not a finished good.

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