If the GDP deflator in 2011 was 130 compared to a value of 100 during the 2005 base year, this would indicate that
A) the inflation rate during 2011 was 30 percent.
B) the general level of prices during 2011 was 30 percent higher than during 2005.
C) the inflation rate during 2011 was 130 percent.
D) nominal GDP grew by 30 percent during 2011.
E) real GDP was 30 percent higher in 2011 than 2005.

Question

Quizplus · Accepted Answer

The GDP deflator is a measure of the general level of prices in the economy, so a value of 130 compared to 100 in the base year indicates that prices were 30% higher in 2011 than in 2005. It does not necessarily indicate the inflation rate or growth in GDP.

If the GDP Deflator in 2011 Was 130 Compared to a Value