Asked by Jeannie Howell on May 16, 2024
Verified
The base year for a price index is the year_____.
A) in which prices were lowest
B) in which prices were highest
C) in which real output was the largest
D) in which prices were stable
E) that serves as a reference point
Base Year
The year with which other years are compared when constructing an index; the index equals 100 in the base year.
Price Index
A statistical measure that shows changes in the price level of a basket of goods and services over time, indicating the cost of living or inflation rate.
- Master the core concepts distinguishing nominal from real GDP and comprehend the crucial function of base years in price indices.
Verified Answer
NH
Nikki HetzellMay 18, 2024
Final Answer :
E
Explanation :
The base year for a price index serves as a reference point for comparing prices in other years. It is not necessarily the year in which prices were lowest, highest, or stable, nor in which real output was the largest.
Learning Objectives
- Master the core concepts distinguishing nominal from real GDP and comprehend the crucial function of base years in price indices.