A GDP deflator of 112 means:
A) the overall price level is 12 percent higher than in the base year.
B) the overall output increased by 12 percent since the base year.
C) every price in the economy has gone up by 12 percent.
D) the production of each good in the economy has increased by 12 percent.

Question

Quizplus · Accepted Answer

A GDP deflator of 112 means that prices have increased by 12 percent compared to the base year. Therefore, choice A is correct. B, C, and D are incorrect because they do not accurately reflect the meaning of a GDP deflator.

A GDP Deflator of 112 Means