Exciting GDP Deflator Calculation!

What is the GDP Deflator?

The nominal GDP for 2019 is $125 billion, and the real GDP for 2019 is $100 billion. What is the GDP Deflator?

A. 1.25

B. 1.0

C. 125

D. 100

Answer:

The GDP deflator is a measure of price inflation or deflation in an economy. It is calculated by dividing the nominal GDP by the real GDP and then multiplying by 100 to express the result as a percentage.

To calculate the GDP deflator in this scenario, we can use the given values:

  • Nominal GDP for 2019 = $125 billion
  • Real GDP for 2019 = $100 billion

GDP Deflator = (Nominal GDP / Real GDP) * 100

GDP Deflator = ($125 billion / $100 billion) * 100

GDP Deflator = 1.25 * 100

GDP Deflator = 125

Therefore, the correct answer is: C. 125

Now you know what the GDP Deflator is and how to calculate it in this scenario. Exciting, right?

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