Suppose that a nation's nominal GDP is $972 billion and the GDP deflator is 90.In order to make this year's GDP comparable to the reference year GDP,this year's GDP must be:
A)adjusted downward to $687 billion
B)deflated to $896 billion
C)inflated to $1080 billion
D)deflated to $875 billion
E)inflated to $896 billion

Question

Quizplus · Accepted Answer

To make this year's GDP comparable to the reference year GDP, we use the formula: Real GDP = Nominal GDP / (GDP Deflator / 100). Plugging in the given values: Real GDP = $972 billion / (90 / 100) = $972 billion / 0.9 = $1080 billion. This means the GDP needs to be inflated to $1080 billion to be comparable to the reference year's GDP.

Suppose That a Nation's Nominal GDP Is $972 Billion and the GDP