When the Australian Bureau of Statistics (ABS)calculates real GDP using the average of prices in the current year and the year preceding it, and this average changes from year-to-year, this is called calculating GDP using:

Question

Quizplus · Accepted Answer

Calculating real GDP using the average of prices in the current year and the year preceding it, and allowing this average to change from year-to-year, is called calculating GDP using chain volume measures. This approach takes into account changes in the composition of the economy and adjusts for inflation using a more current base year. Therefore, choice A is the best option. Fixed volume prices (choice B) use a fixed base year for calculating real GDP, which can lead to distortion when the structure of the economy changes. Current year prices (choice C) do not adjust for inflation and do not take into account changes in the composition of the economy. Fixed base year prices (choice D) use a fixed base year for calculating real GDP, which can lead to distortion over time as the economy changes.

When the Australian Bureau of Statistics (ABS)calculates Real GDP Using