Nominal GDP is less than real GDP in an economy in both 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 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

The base year is the year in which nominal GDP is equal to real GDP. In this case, that is year 3.

Nominal GDP Is Less Than Real GDP in an Economy