The prices of final goods and services in Eduland have increased by 23 percent between Year 1 and Year 2.If Eduland's GDP deflator for Year 1 was 100,its GDP deflator for Year 2 would be ________.
A) 103
B) 50
C) 123
D) 112

Question

Quizplus · Accepted Answer

The GDP deflator is a measure of the price level of goods and services produced in a country. Therefore, if the prices have increased by 23 percent between Year 1 and Year 2, the GDP deflator for Year 2 would be the GDP deflator for Year 1 plus the percentage increase in prices, which is (100 + 23) = 123. Thus, the correct answer is C.

The Prices of Final Goods and Services in Eduland Have