Over a period of time, a nation's GDP increases by 8 percent in constant-price terms and by 6 percent in current-price terms.Other things being equal, the price level must have changed by about
A)14 percent.
B)4 percent.
C)2 percent.
D)−2 percent.

Question

Quizplus · Accepted Answer

The GDP deflator, which measures the change in price level, can be calculated by subtracting the growth rate in constant-price GDP (real GDP) from the growth rate in current-price GDP (nominal GDP). Here, 6% (nominal) - 8% (real) = -2%, indicating a decrease in the price level by about 2%.

Over a Period of Time, a Nation's GDP Increases by 8