Briefly explain The difference between constant and current price in the BOP
Answers
Current Prices measures GDP/ inflation/asset prices using the actual prices we notice in the economy. Current prices make no adjustment for inflation.
Constant prices adjust for the effects of inflation. Using constant prices enables us to measure the actual change in output (and not just an increase due to the effects of inflation.
The difference between constant and current price in the BOP
Explanation:
BOP- BOP( balance of payment) statement shows all the economic transaction of a country with rest of the world. it can be measured at current price or at constant price.
Current price BOP- it the value of economic transactions of a country with rest of the world are recorded at the prevailing market price then it is called current price BOP.
Constant price BOP- In case of constant price some previous year is chosen as base year and the economic transaction are calculated , based on the price of that past year. it is a better indicator of change in quantity of output traded by our country.
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The difference between constant and current price in the BOP
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