The GDP price index compares the price (or cost) of goods and services that make up GDP in a specific year to the price of the same “m The given year's total price is divided by the base year's total price to arrive at the index figure. | b. of goods in a reference year. Price of Market Basket Price Index In Specific Year In Given Year x 100 Price of Same Basket In Base Year The index is expressed as a percentage, so if the base year's prices are higher than the given year, the index will be (_greater, less ) than 100. If the given year's prices are higher than the base year, the index will be ( more, less ) than 100. Because the numerator and denominator will be the same when the given year and base year are the same, the price index for the base year will always be
The GDP price index compares the price (or cost) of goods and services that make up GDP in a specific year to the price of the same “m The given year's total price is divided by the base year's total price to arrive at the index figure. | b. of goods in a reference year. Price of Market Basket Price Index In Specific Year In Given Year x 100 Price of Same Basket In Base Year The index is expressed as a percentage, so if the base year's prices are higher than the given year, the index will be (_greater, less ) than 100. If the given year's prices are higher than the base year, the index will be ( more, less ) than 100. Because the numerator and denominator will be the same when the given year and base year are the same, the price index for the base year will always be
Chapter1: Making Economics Decisions
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![The **GDP price index** compares the price (or cost) of goods and services that make up GDP in a specific year to the price of the same “market basket” of goods in a reference year. The given year’s total price is divided by the base year’s total price to arrive at the index figure.
The formula is:
\[ \text{Price Index In Given Year} = \left( \frac{\text{Price of Market Basket In Specific Year}}{\text{Price of Same Basket In Base Year}} \right) \times 100 \]
The index is expressed as a percentage, so if the base year’s prices are higher than the given year, the index will be (greater) less than 100.
If the given year’s prices are higher than the base year, the index will be (more) less than 100.
Because the numerator and denominator will be the same when the given year and base year are the same, the price index for the base year will always be 100.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa74b6a8e-f1b7-4d29-84ad-edc51d36ecf1%2F63652a56-d093-497d-a0f7-502005098f89%2Fso17u_processed.png&w=3840&q=75)
Transcribed Image Text:The **GDP price index** compares the price (or cost) of goods and services that make up GDP in a specific year to the price of the same “market basket” of goods in a reference year. The given year’s total price is divided by the base year’s total price to arrive at the index figure.
The formula is:
\[ \text{Price Index In Given Year} = \left( \frac{\text{Price of Market Basket In Specific Year}}{\text{Price of Same Basket In Base Year}} \right) \times 100 \]
The index is expressed as a percentage, so if the base year’s prices are higher than the given year, the index will be (greater) less than 100.
If the given year’s prices are higher than the base year, the index will be (more) less than 100.
Because the numerator and denominator will be the same when the given year and base year are the same, the price index for the base year will always be 100.
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