The term used to describe the year whose prices are utilized in computing real GDP is ________.
Show answer & explanation
Correct answer: C
Explanation
The correct answer is Option 3 i.e. base year.
The term used to describe the year whose prices are utilized in computing real GDP is base year. Real GDP is adjusted for inflation using the prices from the base year, allowing for the measurement of economic output in constant terms. By comparing the nominal GDP (current prices) with the real GDP (base year prices), economists can assess the true growth of an economy, excluding the effects of price changes and inflation.