The base year for the calculation of real GDP for the hypothetical economy in Figure 5.2 is closest to

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The hypothetical economy in Figure 5.2 experiences a sharp increase in nominal GDP from year 1 to year 2, which suggests a period of rapid economic growth. The graph also shows that real GDP remains relatively constant over this same period, indicating that the increase in nominal GDP is due to inflation rather than actual economic growth. This suggests that the base year used for calculating real GDP is likely several years prior to year 1, when inflation was lower and real GDP was closer to nominal GDP. Of the available choices, 1980 is the closest to fulfilling these criteria.

The Base Year for the Calculation of Real GDP for the Hypothetical