Question: 1)The base year is 2007, while the current year is 2015... Nominal GDP (2007) = (P2007 * Q2007) racquets + (P2002*Q2002) tennis balls=$50*200 + $1*1000

1)The base year is 2007, while the current year is 2015...

Nominal GDP (2007) = (P2007 * Q2007) racquets + (P2002*Q2002) tennis balls=$50*200 + $1*1000 =$10000+ $1000=$11000=Real GDP (2007)

**Note: In the base year, Nominal GDP=Real GDP since the price level hasn't changed yet. This relationship is a rule

Nominal GDP (2015) = (P2015 * Q2015) racquets + (P2015*Q2015) tennis balls=$80*500 + $1.50*800=$40 000 + $1200 = $41 200

Real GDP (2015) = (P2007*Q2015) racquets + (P2007*Q2015) tennis balls=$50*500 + $1*800=$25000 + $800=$25 800

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