Final answer:
Nominal GDP measures the current value of all final goods and services produced using prices in the year they were produced, which does not take base-year prices into account,
Step-by-step explanation:
The statement that Nominal GDP measures the value of all final goods and services at base-year prices is False. Nominal GDP is a macroeconomic statistic that measures the current value of the output of a nation in a given period, often a year, without adjusting for inflation or changes in price levels. This implies that Nominal GDP values are calculated by using the prices at which goods and services are sold in the year they were produced.
Final goods refer to items that are at their ultimate stage of production and consumption. To avoid the problem of double counting, only final goods are included in the GDP calculations. Double counting would inflate figures erroneously by incorporating the value of intermediate goods—like parts used to make other products—which are already encapsulated in the final goods' prices.
Conversely, Real GDP is the measure that adjusts Nominal GDP to account for changes in price levels and inflation over time. This is done by valuing goods and services at constant prices, using a designated base year as a reference point for price comparison. Thus, Real GDP is the one that measures all final goods and services at base-year prices, not Nominal GDP.
Nominal GDP measures the value of all final goods and services produced in a nation in a year using current prices.
For example, let's say the base year is 2020 and a country produced 100 apples at a price of $1 each. If in the following year, the country produces the same 100 apples, but the price increases to $2 each, the nominal GDP for that year would be $200 (100 apples x $2 each).
Therefore, the statement is false. Nominal GDP measures the value of all final goods and services at current prices, not base-year prices.