If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is
A) 80.
B) 110.
C) 125.
D) 150.

Question

Quizplus · Accepted Answer

GDP deflator is calculated as the ratio of nominal GDP to real GDP multiplied by 100.

GDP deflator = (Nominal GDP / Real GDP) x 100

GDP deflator = ($20,000 billion / $16,000 billion) x 100 
GDP deflator = 1.25 x 100 
GDP deflator = 125

Therefore, the GDP deflator in 2014 is 125.

If Nominal GDP in 2014 Is $20,000 Billion While Real