To make the calculation of real GDP more accurate,in 1996 the BEA switched to using
A)base-year prices.
B)current prices.
C)chain-weighted prices.
D)market prices.

Question

Quizplus · Accepted Answer

The use of chain-weighted prices is the best choice to make the calculation of real GDP more accurate. Chain-weighted prices take into account the changes in both the quantities and prices of goods and services produced in the economy. This allows for a more accurate measure of real economic growth as it adjusts for the substitution effect that occurs when consumers shift their consumption patterns in response to changes in relative prices. Base-year prices and current prices do not account for changes in relative prices over time and are therefore less accurate. Market prices are not a commonly used measure in the calculation of real GDP.

To Make the Calculation of Real GDP More Accurate,in 1996