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Table: Real and Nominal Output
-(Table: Real and Nominal Output) Look at the table Real and Nominal Output. The price index in year 1, using year 3 as the base period, is:
A)25
B)50.
C)100.
D)150.

Question

Use the following to answer questions:
Table: Real and Nominal Output 
-(Table: Real and Nominal Output) Look at the table Real and Nominal Output. The price index in year 1, using year 3 as the base period, is:
A)25 
B)50. 
C)100. 
D)150.

Quizplus · Accepted Answer

To calculate the price index using year 3 as the base period, we need to divide the nominal GDP of year 1 by the price level in year 3 and multiply by 100. 
Price level in year 3 = 200/4 = 50
Price index in year 1 = (300/50) x 100 = 600/5 = 120
Therefore, the correct choice is B, 50.

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