When calculating real GDP,the reference base year
A)allows us to account for changes in GNP compared to GDP.
B)always reduces the value of GDP compared to GNP.
C)allows us to calculate the value of the goods and services in terms of prices of that base year.
D)usually increases the value of GNP compared to GDP.
E)allows us to increase the value of goods and services.

Question

Quizplus · Accepted Answer

The reference base year allows us to calculate the value of goods and services in terms of the prices of that base year, which is known as calculating real GDP. This allows for comparisons across different time periods without being affected by changes in inflation or price levels. It does not relate to changes in GNP compared to GDP, reduce the value of GDP compared to GNP, or increase the value of goods and services.

When Calculating Real GDP,the Reference Base Year