You are told that the GDP deflator decreased from one year to the next. This means that:
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The GDP deflator is a measure of the price level of all new, domestically produced, final goods and services in an economy. It is used to adjust nominal GDP to arrive at real GDP. Show more…
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If nominal GDP is $10 trillion and real GDP is $8 trillion, then the GDP deflator is Group of answer choices 125, and this indicates that the price level has increased by 125 percent since the base year. 125, and this indicates that the price level has increased by 25 percent since the base year. 80, and this indicates that the price level has decreased by 20 percent since the base year. 80, and this indicates that the price level has increased by 80 percent since the base year.
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Under what circumstances would the GDP deflator be less than 100 after the base year? The GDP deflator will be less than 100 if there has been deflation relative to the base year. The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year. There are no circumstances under which the GDP deflator could be less than 100? The GDP deflator will be less than 100 if there has been inflation relative to the base year.
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