Nominal GDP is less than real GDP in an economy in year 1 and year 2.In year 3, nominal GDP is equal to real GDP.In year 4, nominal GDP is slightly greater than real GDP.In year 5, nominal GDP is significantly greater than real GDP.Which year is most likely to be the base year being used to calculate the price index for this economy?
A)2
B)3
C)4
D)5

Question

Quizplus · Accepted Answer

Year 3 is most likely to be the base year because it is the year where nominal GDP is equal to real GDP, indicating that the price level is stable and can be used as a benchmark for calculating price changes in other years.

Nominal GDP Is Less Than Real GDP in an Economy