Suppose that in 2010 Canada's automobile manufacturers produced 2 million cars priced at $20 000 each. And in 2011 they produced 1 million cars priced at $40 000 each. Ceteris paribus, the change in nominal national income is
A)an increase because the price of each car increased.
B)a decrease because fewer cars were produced.
C)insufficient information to know.
D)no change in nominal national income.
E)an increase because of inflation.

Question

Quizplus · Accepted Answer

Nominal national income remains unchanged because the total revenue from car production is the same in both years: 2 million cars x $20,000 = $40 billion in 2010 and 1 million cars x $40,000 = $40 billion in 2011.

Suppose That in 2010 Canada's Automobile Manufacturers Produced 2 Million