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Unformatted text preview: all final goods and services produced annually in a country. (Note: Sometimes GDP is
referred to as nominal GDP. This is sometimes done to distinguish it from real GDP,
which we will discuss later. )
Suppose in a tiny economy only three
goods are produced in these quantities: 10
computers, 10 cars, and 10 watches. We’ll say
that the price of a computer is $2,000, the
price of a car is $20,000, and the price of a
watch is $100. If we wanted to find the GDP
of this small economy—that is, if we wanted
to find the total market value of the goods
produced during the year—we would multiply the price of each good times the quantity of the good produced and then add the
dollar amounts. (See Exhibit 11-1.) 288 Chapter 11 Measuring Economic Performance 1. Find the market value for each good produced. Multiply the price of each good
times the quantity of the good produced. For example, if 10 computers
are produced and the price of each is
$2,000, then the market value of computers is $20,000.
2. Sum the market values.
Here are the calculations:
Market value of computers
$2,000 10 computers $20,000
Market value of cars
$20,000 10 cars $200,000
Market value of watches
$100 10 watches $1,000
$20,000 Gross domest...
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- Winter '14