For the following question(s), suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below.

-If Year 1 is the base year,the GDP price deflator for Year 2 is approximately
A) 100.0.
B) 126.3.
C) 131.3.
D) 181.0.
E) 211.0.

Question

For the following question(s), suppose that an economy produces only bread and computers. Assume that all production is consumed in each year, and that price and quantity data are given in the table below.

-If Year 1 is the base year,the GDP price deflator for Year 2 is approximately
A) 100.0. 
B) 126.3. 
C) 131.3. 
D) 181.0. 
E) 211.0.

Quizplus · Accepted Answer

The GDP price deflator is calculated as (Nominal GDP/Real GDP) x 100. If Year 1 is the base year, the deflator for Year 2 would reflect the change in price level from Year 1 to Year 2. Without specific nominal and real GDP values, we assume the deflator reflects a typical inflation rate, making 126.3 a plausible estimate.

For the Following Question(s), Suppose That an Economy Produces Only