When differences between nominal GDP and real GDP result due to price changes and nothing else is compared, an index called the ________ is created.
A) inflation index
B) consumer price index
C) GDP deflator
D) index of leading indicators

Question

Quizplus · Accepted Answer

The GDP deflator is an index that measures the changes in prices for all goods and services produced within an economy. It is calculated by dividing nominal GDP by real GDP and then multiplying it by 100. The resulting number represents the overall price level of an economy, with changes indicating inflation or deflation. Therefore, when comparing nominal GDP and real GDP to account for price changes, the GDP deflator is the appropriate index to use.

When Differences Between Nominal GDP and Real GDP Result Due