An economy produces only food and fun. The table shows the quantities produced and prices in 2018 and 2019. The base year is 2019. In 2018 Item Quantity Price Calculate nominal GDP in 2018 and nominal GDP in 2019. $1 Food 98 Fun 57 $3 Nominal GDP in 2018 is $ In 2019 Item Quantity Price Food 71 $5 Fun 68 $8

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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An economy produces only food and fun. The table shows the quantities produced and prices in 2018 and 2019. The
base year is 2019.
Calculate nominal GDP in 2018 and nominal GDP in 2019.
In 2018
Item
Quantity
Price
Nominal GDP in 2018 is $ ).
Food
98
$1
Fun
57
$3
In 2019
Item
Quantity
Price
Food
71
$5
Fun
68
$8
Enter your answer in the answer box and then click Check Answer.
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Transcribed Image Text:An economy produces only food and fun. The table shows the quantities produced and prices in 2018 and 2019. The base year is 2019. Calculate nominal GDP in 2018 and nominal GDP in 2019. In 2018 Item Quantity Price Nominal GDP in 2018 is $ ). Food 98 $1 Fun 57 $3 In 2019 Item Quantity Price Food 71 $5 Fun 68 $8 Enter your answer in the answer box and then click Check Answer. Check Answer Clear All 1 part remaining DII DD F12 F11 F10 吕0 000 F8 F9 F7 F6 F5 F4 esc F2 F3 F1 ! 7 8 4 5 1 { P Y [ Q W E R tab K L D F G エ %24
Expert Solution
Step 1

Nominal GDP is the GDP that is not adjusted for prices and is estimated by only using the prices in the year in which the output is produced. It only captures the natural increase and decline of prices which tracks the gradual rise of the value on an economy over a time period. It is used to compare GDP to other variables which are also not adjusted to inflation. The nominal GDP can be estimated using 3 methods that are income, expenditure, or production method of calculating GDP. In the Income method, all the income earned through wages, interest, rents, and profits earned by the firms and individuals is added together during a year. The production method estimated net production by subtracting consumption from the estimated output in a year. The expenditure method estimates the sum of all services and goods purchased within a nation over a course of a year.

 

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