4. Real - Vs. - Nominal GDP

The economy of country X produces 2 goods, bread and butter. In 2019, 740,000 units of bread was sold at $0.55 each and 650,000 units of butter at $0.64 each. From 2019 to 2020, price of bread increased by $0.15 and the units sold fell by 30,000; the price of butter fell by $0.04 and units sold rose by 38,900.

a. Calculate Nominal GDP in 2019 and 2020.Calculate Real GDP in 2020 using 2019 as the base year. (9 points)

2019 Nominal value for Bread: $______________________

2019 Nominal value for Butter: $______________________

2019 Nominal GDP: $ ____________________________________

2020 Nominal value for Bread: $________________________

2020 Nominal value for Butter: $________________________

2020 Nominal GDP: $ ____________________________________

2020 Real value for Bread: $________________________

2020 Real value for Butter: $________________________

2020 Real GDP: $ ____________________________________

b. To evaluate GDP growth rate which of the two values, Real or Nominal GDP, should be used? Explain your answer.