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An increase in national income because of an increase in price is called
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- an increase in national income in real terms
- an increase in national income at constant prices
- an increase in money national income
- an increase in national income at base year prices
- an increase in national income in real terms
Correct Option: D
To find the real value of changes in output under inflationary conditions, the effects of any general price increase (price inflation) must be taken into account. This is done by holding prices constant from a starting measure, called the base year. It holds prices constant in terms of the prices existing in the base year.
