Asked by Tommy Dorfman on Apr 26, 2024
Verified
Statement I: The higher the GDP deflator,the greater the degree of deflation.
Statement II: Real GDP was higher in 1992 than in 1991.
A) Statement I is true and statement II is false.
B) Both statements are true.
C) Statement II is true and statement I is false.
D) Both statements are false.
GDP Deflator
A metric for assessing the price rates of all freshly created, domestic final goods and services in an economy.
Real GDP
Gross Domestic Product adjusted for inflation, measuring the value of goods and services produced by an economy in real terms.
- Determine the relationship between nominal GDP, real GDP, and the GDP deflator as gauges of economic prosperity.
Verified Answer
BG
Brianna GloseApr 27, 2024
Final Answer :
C
Explanation :
Statement I is false because the GDP deflator measures the level of prices in a given year relative to a base year, so a higher GDP deflator does not necessarily indicate deflation.
Statement II may or may not be true as it depends on the actual data for real GDP in 1991 and 1992. Therefore, we cannot evaluate the truth of statement II based on the given information.
Statement II may or may not be true as it depends on the actual data for real GDP in 1991 and 1992. Therefore, we cannot evaluate the truth of statement II based on the given information.
Learning Objectives
- Determine the relationship between nominal GDP, real GDP, and the GDP deflator as gauges of economic prosperity.