Question

if real gdp in 1995 was $4053.7 billion and nominal gdp in 1995 was $4220.3 billion, what was the value of the gdp deflator in 1995?

Answer 1

Answer:

GDP deflator in 1995 was 104.11

GDP deflation rate in 1995 was 4.11%

Explanation:

GDP deflator is a term referring to a measure of level prices of domestically produced final products in an economy.

We have the formula as follow:

       GDP deflator = 100 x $\frac{Nominal GDP}{Real GDP}$

So that, replace the formula with data, GDP deflator in 1995 can be calculated as follow:

       GDP deflator = 100 x (4220.3/ 4053.7) = 104.11

=> GDP deflation rate was: 4.11%