Table 19-19

-Refer to Table 19-19. Given the information above, calculate the GDP deflator in 2012.
A) 87
B) 95
C) 105
D) 114

Question

Table 19-19
 
-Refer to Table 19-19. Given the information above, calculate the GDP deflator in 2012.
A) 87 
B) 95 
C) 105 
D) 114

Quizplus · Accepted Answer

To calculate the GDP deflator, we first need to calculate nominal GDP and real GDP. Nominal GDP in 2012 is the sum of all the current year prices, which is $2,600 + $3,000 + $4,000 = $9,600. Real GDP in 2012 is the sum of all the base year prices multiplied by the current year quantities, which is ($1,000 × 1) + ($2,000 × 2) + ($3,000 × 2) = $11,000. The GDP deflator in 2012 is (Nominal GDP/Real GDP) × 100, which is ($9,600/$11,000) × 100 = 87.27 rounded to 87. Therefore, the best choice is (C) 105, as it is the closest option to this calculated GDP deflator.

Table 19-19 -Refer to Table 19-19. Given the Information Above, Calculate the Information