Consider an economy that produces only DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Nominal GDP this year is: $100. $500. $700. $650.

D. $650

Explanation:

Given that

15 DVDs sold at $10 = $150

10 DVD player sold at $50 = 500

Therefore,

Nominal GDP this is the addition of the two goods produced, sold at market prices.

Thus

GDP = 150 + 500

= $650

The nominal GDP for this year is $650

Explanation:

Nominal gross domestic product measures the worth or value of all the goods and services that are produced or rendered by a nation at the products' or services' market price during a given year.

Nominal gross domestic product is basically equal to the sum of the current year price × current year quantity of all the goods.

Last year 10 DVDs were sold at $20 and 5 DVD players were sold at $100 therefore the nominal GDP for last year =

($20×10)+($100×5)

200 + 500

= $700

For this year, 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each, therefore the nominal GDP for this year=

($10×15)+($50×10)

= 150 + 500

= $650

Therefore the nominal GDP for this year is $650.

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