If GDP rises by 200 percent since the base year and output remains the same,then the GDP deflator in the current year is

Question

Quizplus · Accepted Answer

The GDP deflator is calculated as (Nominal GDP/Real GDP) * 100. If GDP rises by 200 percent, it triples its original size (an increase of 200 percent means it is now 300 percent of the original). Since the output remains the same, the entire increase is due to price increases. Therefore, the GDP deflator would be 300, indicating prices have tripled.

If GDP Rises by 200 Percent Since the Base Year