Assume an economy that is producing only one product. Output and price data for a three-year period are as follows. Answer the question on the basis of these data. year units of output price per unit 1 20 4 2 25 4 3 30 6

Refer to the above data. The nominal GDP for year 3 is:

a) 50 percent higher than the nominal GDP for year 1.
b)   125 percent higher than the nominal GDP for year 1.
c) $120.
d) $30.

ANSWER:

b)   125 percent higher than the nominal GDP for year 1.