If GDP rose from $5 trillion in the base year to $7 trillion in the current year,and during this period the GDP deflator rose by less than 40 percent,the most accurate statement we can make about the change in real GDP from the base year to the current year is that

Question

Quizplus · Accepted Answer

Since the GDP deflator rose by less than 40%, the increase in nominal GDP (from $5 trillion to $7 trillion) must contain some increase in real GDP and some increase due to inflation. Therefore, the real GDP must have risen by less than 40%, which means choice A is the correct answer.

If GDP Rose from $5 Trillion in the Base Year