Suppose a Small Economy Produces Only MP3 Players

Multiple Choice

Suppose a small economy produces only MP3 players. In year 1, 10,000 MP3 players are produce and sold at a price of $100 each. In year 2, 12,000 MP3 players are produced and sold at a price of $80 each. Which of the following statements is true?

A) Real GDP and nominal GDP both increase
B) Real GDP increases while nominal GDP remains constant
C) Real GDP decreases while nominal GDP increases
D) Real GDP increases while nominal GDP decreases