Assume that the real output (RO) for a country is expected to be 2.4 million pro

Question

Assume that the real output (RO) for a country is expected to be 2.4 million products. a. If the price level (PL) is $250 per product, what will be the amount of the gross national product (GDP)? b. Now assume the GDP is projected to be $8 million next year. What will the PL of the products need to be to reach the GDP target? c. Now assume that the RO of 2.4 million products in composed of equal amounts of two types of products. Te first product sell for $100 each, and the second product sells for $500 each. What will be the size of the GDP?

Explanation / Answer

GDP =RO*PL GDP= $250*2.4M = $600M Assume GDP = $8M $250*PL=8M PL = $32,000 ($8M divided by $250) Assume RO = 2.4M 1.2M*$100=$120M 1.2M*$500=$600M GDP = $720M ($120M+$600M)

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