1000 points Suppose the GDP deflator grew by 10 percent from

10.00 points Suppose the GDP deflator grew by 10 percent from last year to this year. That is, the infation rate this year is 10 percent. This means that overall: O real GDP and prices both rose by 10 percent. O real GDP in the economy has risen by 10 percent. O prices in the economy have risen by 10 percent. O output in the economy rose by 10 percent. This inflation rate implies that the growth rate in real GDP is 10 percent O more than the growth rate in nominal GDP. O less than the growth rate in inflation. O more than the growth rate in inflation O less than the growth rate in nominal GDP References eBook & Resources Learning Objective: 07-04 Explain the and calculate the GDP deflator Multiple Choice

Solution

1.

prices in the economy has risen by 10 percent

the above is the answer because deflator measures only the change in the prices.

2.

less than the growth rate in nominal GDP

the above is the answer because nominal GDP rises due to higher prices.