Asked by Nathan Labonté on May 11, 2024
Verified
In 1986,the base year,GDP was 4000.In 1989 the GDP deflator was 115.We may conclude that
A) there was some inflation between 1986 and 1989.
B) there was some deflation between 1986 and 1989.
C) real GDP declined between 1986 and 1989.
D) GDP declined between 1986 and 1989.
GDP Deflator
An indicator of the price levels for all newly produced domestic final goods and services within an economy, utilized for transforming nominal GDP into real GDP.
Inflation
A universal surge in prices and a dip in the value of monetary assets.
Real GDP
The measure of a country's economic output adjusted for price changes or inflation.
- Compare and contrast nominal and real Gross Domestic Product, while also elucidating on inflation and deflation.
- Gain insight into the critical role played by the GDP deflator in the transformation of nominal GDP to real GDP.
Verified Answer
HG
Helene GartiMay 14, 2024
Final Answer :
A
Explanation :
The GDP deflator measures the change in prices of all goods and services included in GDP. An increase in the GDP deflator from 100 to 115 indicates that prices have increased by 15% since the base year. Therefore, we can conclude that there was some inflation between 1986 and 1989.
Learning Objectives
- Compare and contrast nominal and real Gross Domestic Product, while also elucidating on inflation and deflation.
- Gain insight into the critical role played by the GDP deflator in the transformation of nominal GDP to real GDP.