If national income accountants fail to make an adequate adjustment for increases in the quality of goods and services over time,
A) increases in real GDP will understate the growth rate of real output.
B) increases in real GDP will overstate the growth rate of real output.
C) the GDP deflator will overstate the rate of inflation.
D) the GDP deflator will understate the rate of inflation.
E) both a and c are correct.

Question

Quizplus · Accepted Answer

If national income accountants fail to make an adequate adjustment for increases in the quality of goods and services over time, both increases in real GDP will understate the growth rate of real output and the GDP deflator will overstate the rate of inflation.

If National Income Accountants Fail to Make an Adequate Adjustment