In the base year,real GDP ______ nominal GDP.
A) is greater than
B) is less than
C) is equal to
D) could be greater or less than
E) is one-half of

Question

Quizplus · Accepted Answer

In the base year, the GDP deflator, which measures the price level, is set to 100. As a result, nominal GDP and real GDP have the same value, since real GDP is calculated by adjusting nominal GDP for changes in prices using the GDP deflator, which is 100 in the base year. Therefore, real GDP is equal to nominal GDP in the base year.

In the Base Year,real GDP ______ Nominal GDP