If real gross domestic product (GDP)grew by 4 percent and nominal GDP grew by 3 percent,then the inflation rate was
A) 1 percent.
B) -1 percent.
C) 7 percent.
D) 12 percent.
E) 0 percent.

Question

Quizplus · Accepted Answer

The inflation rate can be calculated as the difference between the nominal GDP growth rate and the real GDP growth rate. 
Inflation rate = Nominal GDP growth rate - Real GDP growth rate 
In this case, Nominal GDP grew by 3% and Real GDP grew by 4%, so: 
Inflation rate = 3% - 4% = -1% 
Therefore, the inflation rate was negative 1% or deflation.

If Real Gross Domestic Product (GDP)grew by 4 Percent and Nominal