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The annual output and prices of a 3-good economy are shown in the table below.
| Good | Price Year 1 | Quantity of Goods Year 1 | Price Year 2 | Quantity of Goods Year 2 |
|---|---|---|---|---|
| Quarts of ice cream | $5.00 | 4 | $5.00 | 6 |
| Botties of shampoo | $3.00 | 2 | $3.00 | 3 |
| Jars of peanut butter | $2.00 | 4 | $2.00 | 3 |
Instructions: Enter your answers as whole numbers.
a. What was GDP in year 1? Instructions: Enter your answers as whole numbers.
b. What was GDP in year 2?
Revelant knowledge
GDP: GDP is an abbreviation for Gross Domestic Product. This concept was conceived to quantify the macroeconomics of an economy’s output, as a result of Keynesian economics in the 1930s.
a) GDP in year 1 = 5*4 + 3*2 + 2*4 = 20 + 6 + 8 = $34
b) GDP in year 2 = 5*6 + 3*3 + 2*3 = 30 + 9 + 6 = $45