Asked by Jagmeet Sahota on Jul 21, 2024
Verified
If the GDP deflator in 2009 was 150 and the GDP deflator in 2010 was 175, then the inflation rate in 2010 was 25%.
Inflation Rate
A measure of how quickly the average cost of goods and services escalates, reducing the value of money to buy these over time.
GDP Deflator
An economic metric that converts output measured at current prices into constant-dollar terms, helping in analyzing and comparing levels of economic activity over time.
- Comprehend the principle of inflation, its origins, and its association with Gross Domestic Product and the GDP deflator.
Verified Answer
LC
LaidBack CefoeJul 27, 2024
Final Answer :
False
Explanation :
The inflation rate is calculated based on the percentage change in the GDP deflator from one year to the next. The calculation for the inflation rate from 2009 to 2010 would be 175−150150×100%=16.67%\frac{175 - 150}{150} \times 100\% = 16.67\%150175−150×100%=16.67% , not 25%.
Learning Objectives
- Comprehend the principle of inflation, its origins, and its association with Gross Domestic Product and the GDP deflator.