The formula for converting the current dollar value to the constant dollar value is
A) real × (base year index / current year index).
B) nominal × (base year index / current year index).
C) real / (base year / current year index).
D) nominal / (base year / current year index).

Question

Quizplus · Accepted Answer

The correct formula for converting current dollar value (nominal value) to constant dollar value is by adjusting it with the price index of the base year relative to the current year index, which is done by multiplying the nominal value by the ratio of the base year index to the current year index.

The Formula for Converting the Current Dollar Value to the Constant