o d P 245 825 525 0 015 2015 2016 2016 15 200 800 500 Planes

o d P. $245 $825 $525 0 015 2015 2016 2016 15 $200 $800 $500 Planes 27 Trains 10 Automobiles 20 18 Table 2. Refer to Table-2. What is the GDP deflator in 2016 (Use 2015 as the base year)? Select one: b. 110 c. 94 d. 123

Solution

Answer
GDP deflator=(Nominal GDP/RGDP)*100
Nominal GDP in 2016=sum of(Price in 2016*Quantity in 2016)
=27*245+5*825+18*525
=20190
Real GDP in 2016=sum of (price in 2015(the base year price) *quantity in 2016)
=200*27+800*5+500*18
=18400
GDP deflator=(20190/18400)*100
=109.728261
The GDP deflator is 110
Option b