Question

Changes in the GDP deflator reflect a. neither changes in prices nor changes in the amounts being produced. b. only changes in the amounts being produced. c. only changes in prices. d. both changes in prices and changes in the amounts being produced.

Answer 1

Answer:

c. only changes in prices

Explanation:

GDP deflator is used to calculate changes in price level or changes in inflation.

GDP deflator = (Nominal GDP / Real GDP) × 100

Nominal GDP is GDP calculated at current year prices.

Real GDP is GDP calculated at base year prices.

GDP is the sum of all final goods and services produced in an economy within a given period which is usually a year.

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