Between two years, GDP at constant prices increased by 5 percent while GDP at current prices increased by 8 percent. Based on this information, the price level
A) increased by 3 percent.
B) increased by 13 percent.
C) decreased by 3 percent.
D) decreased by 13 percent.

Question

Quizplus · Accepted Answer

The difference between the increase in GDP at current prices (8%) and the increase in GDP at constant prices (5%) represents the increase in the price level. Therefore, 8% - 5% = 3%, which means that the price level increased by 3%.

Between Two Years, GDP at Constant Prices Increased by 5