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Answer :
Final answer:
Nominal GDP in Year One is $158.10 and in Year Two is $209.90. Real GDP in Year One is $158.10, and in Year Two is $159.90, using Year One prices for Year Two quantities.
Explanation:
To calculate the Nominal GDP and Real GDP, we multiply the quantities of goods produced by their respective prices. In the base year, the calculations for Nominal GDP and Real GDP are the same.
Nominal GDP in Year One
(11A × $1.20) + (25B × $2.10) + (28C × $3.30) = ($13.20) + ($52.50) + ($92.40) = $158.10
Nominal GDP in Year Two
(10A × $1.80) + (28B × $2.90) + (27C × $4.10) = ($18.00) + ($81.20) + ($110.70) = $209.90
Real GDP in Year One
Since Year One is the base year, Real GDP is the same as Nominal GDP: $158.10
Real GDP in Year Two
Use Year One prices for Year Two quantities: (10A × $1.20) + (28B × $2.10) + (27C × $3.30) = ($12.00) + ($58.80) + ($89.10) = $159.90
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