Economics · Macroeconomic Indicators
What is the direct consequence of a reduced nominal GDP figure due to a base year revision (the 'denominator effect')?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Tax buoyancy improves due to a smaller nominal base.
- 2Nominal GDP rises automatically in subsequent quarters.
- 3Fiscal deficit and debt ratios relative to GDP increase.✓
- 4Real GDP falls and the repo rate is revised upward automatically.
Correct answer
Fiscal deficit and debt ratios relative to GDP increase.
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