If the GDP deflator is less than 100,then for that year,nominal GDP ________ real GDP.
A)equals
B)is greater than
C)is less than
D)may be greater than or less than

Question

Quizplus · Accepted Answer

The GDP deflator is a measure of the overall price level of goods and services produced in an economy. If the GDP deflator is less than 100, it means that prices have decreased compared to the base year.

Nominal GDP is calculated using current market prices, while real GDP is adjusted for inflation using a price index such as the GDP deflator. If the GDP deflator is less than 100, this means that prices have decreased compared to the base year, so nominal GDP will be greater than real GDP (since nominal GDP uses current, higher prices). Therefore, C is the correct answer.

If the GDP Deflator Is Less Than 100,then for That