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Under which condition is comparison of real GDP across years more meaningful?

Answer and explanation

Correct answer: When output is valued at common base-year prices

Meaningful comparison across years requires separating changes in production quantities from changes in prices. Valuing each year’s output at common base-year prices removes the influence of changing prices and makes the resulting real GDP series more comparable. Thus option B is correct. Current prices measure nominal GDP, adding imports is conceptually wrong, and changing currencies does not solve the price-bias problem.

Related tags

Real GdpConstant PricesTime ComparisonBase YearGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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