Question

Harry's Pizza Parlor produced 10,000 large pizzas last year that sold for $10 each. This year Harrys produced 11,000 large pizzas (identical to last year's pizzas) but sold them for $12 each. Based on this information, we can conclude that Harry's production of large pizzas

Answer 1

Answer:

Increased both nominal and real GDP

Explanation:

Harry's Pizza Parlor's pizza production increased the nominal GDP by $32,000 (= $132,000 - $100,000).

Harry's pizza production increased the real GDP by $10,000 (= 1,000 pizzas x $10).

The real GDP is not affected by inflation rate, so the real GDP must be calculated using a pizza price of $10. Also, the increase in real GDP is given only by the increase in quantity produced = 11,000 pizzas - 10,000 pizzas = 1,000 pizzas.