Suppose a small economy produces only mp3 players. in year 1, 10,000 mp3 players are produce and sold at a price of $100 each. in year 2, 12,000 mp3 players are produced and sold at a price of $80 each. which of the following statements is true?
a) real gdp and nominal gdp both increase
b) real gdp increase while nominal gdp remains constant
c) real gdp decreases while nominal gdp increases
d) real gdp increases while nominal gdp decreases

The correct answer is option D.

Explanation:

A small economy produces only MP3 players.

In year 1, 10,000 MP3 players are produce and sold at a price of $100 each.

In year 2, 12,000 MP3 players are produced and sold at a price of $80 each.

GDP in year 1

=

= 1,000,000

Nominal GDP in year 2

=

= 960,000

Real GDP in year 2

=

= 1,200,000

The real and nominal GDP for year 1 will be the same. For year 2 nominal GDP is calculated on the current prices while real GDP is calculated on constant prices.

We see that real GDP has increased as the quantity of output has increased. Nominal GDP has decreased because the price has decreased.

it's actually a very difficult task, due to not many people can make 2 million dollars in 2 years. besides that, to the not-so-realistic ideas, you can create a business. it could be practically anything, but make it into a business that isn't that known yet, you get me? also, lets not forget about stock market. that's where all the good stuff happens. use investments at the beginning and begin to raise up your business or whatever you're going to do. as this is a very non-realistic idea, it's still worth the shot!