The table below shows the total output and prices for an economy that produces only two goods,potatoes and oil.Data is provided for the years 2008 and 2018. Quantities Produced Prices TABLE 20-6
Refer to Table 20-6.If 2008 is the base year,the GDP deflator in 2018 was

Question

The table below shows the total output and prices for an economy that produces only two goods,potatoes and oil.Data is provided for the years 2008 and 2018. Quantities Produced Prices  TABLE 20-6
Refer to Table 20-6.If 2008 is the base year,the GDP deflator in 2018 was

Quizplus · Accepted Answer

To calculate the GDP deflator, we need to find the nominal GDP and the real GDP for both years.

Nominal GDP in 2008 = (200 x $0.50) + (50 x $2.00) = $150
Nominal GDP in 2018 = (300 x $1.00) + (75 x $2.50) = $525

Real GDP in 2008 = (200 x $0.50) + (50 x $1.00) = $100
Real GDP in 2018 = (300 x $0.50) + (75 x $2.00) = $375

Therefore, the GDP deflator in 2018 (using 2008 as the base year) is:

GDP deflator = (Nominal GDP/Real GDP) x 100
GDP deflator = ($525/$100) x 100
GDP deflator = 131.67

Thus, the answer is D) 131.67.

The Table Below Shows the Total Output and Prices for an Economy