AP Macroeconomics 2.1: The Circular Flow and GDP

Understand GDP as final output and a flow of income and spending, then calculate nominal GDP from current prices and quantities.

Covered syllabus points

MEA-1.A—a. Define (using the circular flow diagram as appropriate) how GDP is measured and its components. b. Calculate nominal GDP

[Maximum number: 1]

The table provided shows the quantity and price of food and clothing, the only two goods produced and consumed in the country of Maltrose, in year 1 and year 2. Assume that year 1 is the base year.

Table for Question 2.1 The Circular Flow and GDP question 1 — AP Macroeconomics

Calculate the nominal GDP in year 2. Show your work.

$\text { Nominal GDP }{ }_{\text {Year } 2}=(\$ 13 \times 10)+(\$ 4 \times 20)=\$ 210$

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Covered syllabus points

2.1 The Circular Flow and GDP question 1