Real and Nominal GDP
-Based on the table "Real and Nominal GDP," if year one is the base year,then the inflation rate in year three is ________.
A)14.6%
B)9.5%
C)9.9%
D)11.5%
E)16.5%

Question

Real and Nominal GDP 
-Based on the table "Real and Nominal GDP," if year one is the base year,then the inflation rate in year three is ________.
A)14.6% 
B)9.5% 
C)9.9% 
D)11.5% 
E)16.5%

Quizplus · Accepted Answer

The inflation rate can be calculated using the formula for the GDP deflator: [(Nominal GDP / Real GDP) * 100] - 100. Since year one is the base year, the inflation rate for year three is calculated by comparing year three's nominal GDP to its real GDP. The correct calculation leads to an inflation rate of 9.5%.