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Table: Price and Output Data
-(Table: Price and Output Data) Look at the table Price and Output Data. Between years 4 and 5, _____ of the increase in nominal GDP was due to inflation.
A)none
B)58%
C)92%
D)all

Question

Use the following to answer questions :
Table: Price and Output Data 
-(Table: Price and Output Data) Look at the table Price and Output Data. Between years 4 and 5, _____ of the increase in nominal GDP was due to inflation.
A)none 
B)58% 
C)92% 
D)all

Quizplus · Accepted Answer

From year 4 to year 5, nominal GDP increased from $400 billion to $520 billion, which is a 30% increase. However, the GDP deflator also increased from 100 to 158, which means there was 58% inflation. Therefore, 58% of the increase in nominal GDP is due to inflation (the rest is due to real economic growth).

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