In the base year:
A) nominal and real GDP are equal by definition.
B) nominal GDP is always larger than real GDP because prices are held constant.
C) real GDP is always larger than nominal GDP because prices are held constant.
D) real GDP will only be larger than nominal GDP if prices increased in the base year.

Question

Quizplus · Accepted Answer

By definition, nominal GDP is calculated using current prices and real GDP is calculated using constant prices from the base year. In the base year, the prices used in both calculations are the same, so nominal and real GDP will be equal.

In the Base Year