If the GDP deflator is less than 100, then
A) nominal GDP is greater than real GDP.
B) nominal GDP is lower than real GDP.
C) nominal GDP equals real GDP.
D) prices decreased by more than half between the current and the base years.

Question

Quizplus · Accepted Answer

The GDP deflator is calculated as (Nominal GDP / Real GDP) * 100. If the deflator is less than 100, it means that the nominal GDP is lower than the real GDP, indicating that prices have fallen since the base year.

If the GDP Deflator Is Less Than 100, Then