The chain-weighted output index
A) uses only the current yearʹs prices to calculate growth in real GDP.
B) uses prices for the current year and the previous year to calculate growth in real GDP.
C) is an inaccurate way to measure growth in real GDP and so has been replaced by the ʺnominal-to-realʺ index.
D) must be calculated only every other year.

Question

Quizplus · Accepted Answer

The chain-weighted output index uses prices for the current year and the previous year to calculate growth in real GDP. This measure is considered more accurate than the traditional fixed-weighted index, which uses prices from a base year to calculate real GDP growth. The nominal-to-real index is not a replacement for the chain-weighted index, but rather a separate calculation that converts nominal GDP to real GDP using a fixed set of prices from a base year. The chain-weighted index should be calculated annually.

The Chain-Weighted Output Index