ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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GDP has decreased 5 percent
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the inflation rate is 5 percent
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GDP has increased 105 percent
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the inflation rate is 105 percent
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Detailed explanation-1: -If the GDP deflator is greater than 100, then the economy has seen a positive change in price level since the base year. In other words, the economy has experienced inflation.
Detailed explanation-2: -For example, if the GDP Deflator is 112 the year after the base year, then it indicates that the average price of the output increased by 12%.
Detailed explanation-3: -It is a more comprehensive measure of inflation The GDP deflator, also called implicit price deflator, is a measure of inflation. It is the ratio of the value of goods and services an economy produces in a particular year at current prices to that of prices that prevailed during the base year.
Detailed explanation-4: -Calculating the GDP price deflator requires dividing the gross domestic product (GDP) in the current year (called nominal GDP) by the value of those same products if they were sold at 2012 prices (called real GDP). The result is multiplied by 100 to convert the decimal into an index value with a base year value of 100.