Asked by Angel Medrano on Jun 05, 2024
Verified
If GDP rose from $5 trillion in the base year to $7 trillion in the current year,and during this period the GDP deflator rose by less than 40 percent,the most accurate statement we can make about the change in real GDP from the base year to the current year is that
A) it rose by less than 40 percent.
B) it rose by 40 percent.
C) it rose by more than 40 percent.
D) it did not change.
E) it fell.
GDP Deflator
An economic metric that converts output measured at current prices into constant-dollar GDP, stripping out the effects of inflation to reflect the real volume of goods and services produced.
- Highlight the differences among nominal GDP, real GDP, and the GDP deflator.
Verified Answer
DC
Diana CarreiroJun 05, 2024
Final Answer :
A
Explanation :
Since the GDP deflator rose by less than 40%, the increase in nominal GDP (from $5 trillion to $7 trillion) must contain some increase in real GDP and some increase due to inflation. Therefore, the real GDP must have risen by less than 40%, which means choice A is the correct answer.
Learning Objectives
- Highlight the differences among nominal GDP, real GDP, and the GDP deflator.