Janet calculated the GDP growth rates for France between 2010 and 2011.Using 2010 prices for both years, GDP increased 5 percent.Using 2011 prices for both years, GDP increased 1 percent.Hence the chained-price method will calculate that between these years, real GDP increased by

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Quizplus · Accepted Answer

The chained-price method aims to calculate GDP growth rates by taking into account both current and constant prices. In this case, since the growth rate using 2010 prices was higher than the growth rate using 2011 prices, it suggests that there was some inflation between the two years. Therefore, the chained-price method will adjust for this inflation and likely calculate a growth rate somewhere between the two rates calculated using current and constant prices. A 1 percent increase using 2011 prices suggests that the economy did not grow much in real terms, whereas a 5 percent increase using 2010 prices suggests strong real growth. Therefore, the chained-price method will likely calculate a growth rate lower than 5 percent but higher than 1 percent, which points to option B (3 percent) as the best choice.

Janet Calculated the GDP Growth Rates for France Between 2010