Table 7.1 GDP
$$\begin{array} { | l | r | c | r | }
\hline & \begin{array} { c }
\text { Nominal GDP(in billions of } \
\text { dollars) }
\end{array} & \text { GDP deflator } & { \text { CPI } } \
\hline 2002 &\$6,992.4 & 106.2 & 151.6 \
\hline 2003 & 7,431.6 & 109.1 & 153 .8 \
\hline 2004 & 7,843.2 & 112.3 & 157 .8 \
\hline
\end{array}$$ Based on Table 7.1,the rate of inflation between 2003 and 2004,using the GDP deflator,was
A)2.4 percent.
B)2.9 percent.
C)6.2 percent.
D)4.1 percent.

Question

Table 7.1 GDP
$$\begin{array} { | l | r | c | r | } 
\hline & \begin{array} { c } 
\text { Nominal GDP(in billions of } \
\text { dollars) }
\end{array} & \text { GDP deflator } & { \text { CPI } } \
\hline 2002 &\$6,992.4 & 106.2 & 151.6 \
\hline 2003 & 7,431.6 & 109.1 & 153 .8 \
\hline 2004 & 7,843.2 & 112.3 & 157 .8 \
\hline
\end{array}$$ Based on Table 7.1,the rate of inflation between 2003 and 2004,using the GDP deflator,was
A)2.4 percent.
B)2.9 percent.
C)6.2 percent.
D)4.1 percent.

Quizplus · Accepted Answer

The rate of inflation using the GDP deflator is calculated by taking the change in the GDP deflator from one year to the next, dividing by the GDP deflator in the initial year, and then multiplying by 100 to convert to a percentage. For 2003 to 2004, the calculation is $\frac{112.3 - 109.1}{109.1} \times 100 = 2.9$ percent.

Table 71 GDP Based on Table 7