Question

What is the significance of the base year in GSDP calculations?

• A. It is the year with the highest GSDP.
• B. It is the first year for which data was collected.
• C. It is the year when the state was formed.
• D. It is the fixed reference year used to eliminate the effect of price changes.

Answer 1

Answer:

D. It is the fixed reference year used to eliminate the effect of price changes.

• The base year is a fixed reference period whose prices are used to calculate GSDP at constant prices, providing a measure of real economic growth.