91Ó°ÊÓ

The nominal GDP is the ultimate value of all goods and services produced within national borders before inflation is factored in, whereas the real GDP is the final value of goods and services produced within national borders after inflation is factored in.

(a) The formula for calculating nominal GDP is as follows:

$NGD{P}_n=(\text{Price}{)}_n×(\text{Quantity}{)}_n$

The following is the nominal GDP calculation for the year $2015$:

$NGD{P}_{2015}=(\$1,000×10)+(\$6×3,000)+(\$100×500)+(\$1×10,000)$

$=\$10,000+\$18,000+\$50,000+\$10,000$

localid="1651733151959" $=\$88,000$

As a result, the nominal GDP for $2015$is $\$88,000$

The following is the formula for calculating nominal GDP for the year $2016:$

$NGD{P}_{2016}=(\$800×15)+(\$11×1,000)+(\$150×300)+(\$2×10,000)$

$=\$12,000+\$11,000+\$45,000+\$20,000$

$=\$88,000$

As a result, the nominal GDP for $2016$is $\$88,000$

The formula for calculating Real GDP is as follows:

$RGD{P}_n=(\text{Price}{)}_{\text{Base}}×(\text{Quantity}{)}_n$

The following is the real GDP calculation for the$2015$ year :

$RGD{P}_{2015}=(\$800×10)+(\$11×3,000)+(\$150×500)+(\$2×10,000)$

$$\begin{gathered} =\$8,000+\$33,000+\$75,000+\$20,000 \\ =\$136,000 \end{gathered}$$

As a result, the real GDP for$2015$ is $\$136,000$.

The real GDP computation for the year $2016$is presented below.

$RGD{P}_{2016}=(\$800×15)+(\$11×1,000)+(\$150×300)+(\$2×10,000)$

$=\$12,000+\$11,000+\$45,000+\$20,000$

$=\$88,000$

As a result, the nominal GDP value for $2016$is $\$88,000$.