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

Question

Quizplus · Accepted Answer

The base year for the calculation of real GDP is the year used as a benchmark for measuring changes in output over time. In Figure 5.2, the hypothetical economy starts in 1980, so it is unlikely that the base year is before 1980. Additionally, the GDP values in the graph are given in billions of dollars, which suggests a relatively modern era with high levels of economic activity. Therefore, the best choice is B, 1980, as it is the closest year to the start of the hypothetical economy and most likely to be the base year for measuring changes in real GDP.

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