Table 19-18
A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above.
-Refer to Table 19-18. What is the GDP deflator in 2008 if 2013 is the base year?

Question

Table 19-18
  A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above.
-Refer to Table 19-18. What is the GDP deflator in 2008 if 2013 is the base year?

Quizplus · Accepted Answer

The GDP deflator is calculated as (Nominal GDP/Real GDP) x 100. If 2013 is the base year, the GDP deflator for 2008 would be less than 100 if prices were lower in 2008 compared to 2013. Hence, 87 is a plausible deflator value indicating that the price level in 2008 was 87% of the price level in 2013.

Table 19-18 a Very Simple Economy Produces Three Goods: Cameras