-Refer to Table 5-2. Using 2017 as the base year, what can we conclude for 2018?
A) Real GDP is $880, and the GDP deflator is 80.
B) Real GDP is $880, and the GDP deflator is 95
C) Real GDP is $880, and the GDP deflator is 125
D) Real GDP is $950, and the GDP deflator is 95.

Question

-Refer to Table 5-2. Using 2017 as the base year, what can we conclude for 2018?
A) Real GDP is $880, and the GDP deflator is 80. 
B) Real GDP is $880, and the GDP deflator is 95 
C) Real GDP is $880, and the GDP deflator is 125 
D) Real GDP is $950, and the GDP deflator is 95.

Quizplus · Accepted Answer

Real GDP remains constant if 2017 is the base year because the quantities of goods and services produced are valued at 2017 prices. The GDP deflator for 2018 indicates inflation, as it shows an increase in the price level from the base year.