The year whose Prices are being used to calculate the real GDP is called_________.

Correct option is C

The correct answer is (c) Base year.

The Base year is the year whose prices are used to calculate the real GDP. Real GDP measures a country's economic output adjusted for price changes (inflation or deflation) by using the prices from a base year. This approach allows for a more accurate comparison of economic growth over time, as it eliminates the effect of price level changes and focuses on actual production changes. The base year is periodically updated by statistical agencies to ensure that GDP calculations reflect current economic conditions.

Information Booster:

● The base year provides a reference point, using a fixed set of prices to measure real GDP over time.
● Real GDP reflects the true growth in economic output, as it is adjusted for inflation using base year prices.
● Changing the base year is a common practice to keep GDP estimates relevant and reflective of the current economy.
● In India, for example, the base year has been updated periodically, with recent years including 2011-12 and 2004-05.
● Using the base year for real GDP calculations helps in understanding actual economic growth without the influence of price fluctuations.
● Nominal GDP, in contrast, uses current prices and may not accurately reflect true growth due to inflation effects.