Answer to Question #309002 in Microeconomics for Kinza Tariq

Question

7. Explain the concept of chain-weighted real GDP. What problems with the previous measure

of real GDP led to the introduction of this new measure?

Answer 1

Estimation of real GDP in (chained) dollar terms is made by multiplying the chain-type quantity index for a year times the level of nominal GDP in the reference year and dividing by 100.