If the GDP deflator in 2004 was 150 and the GDP deflator in 2005 was 120,then the inflation rate in 2005 was 25%.

Question

Quizplus · Accepted Answer

The inflation rate in 2005 can be calculated using the formula:

Inflation rate = ((GDP deflator in 2005 - GDP deflator in 2004) / GDP deflator in 2004) x 100

Substituting the values given:

Inflation rate = ((120 - 150) / 150) x 100 = -20/15 x 100 = -133.33%

This means that there was actually deflation (i.e., prices decreased) between 2004 and 2005. Therefore, the statement is false.

If the GDP Deflator in 2004 Was 150 and the GDP