Is it possible to have a GDP deflator of less than 100?
A) Yes, it would indicate a year when prices were lower than in the base year.
B) Yes, it would indicate a year when output was lower than in the base year.
C) No, that is mathematically impossible for the deflator to be less than 100.
D) Yes, it would indicate a year when prices were lower than in the previous year.

Question

Quizplus · Accepted Answer

A GDP deflator measures the changes in the prices of all goods and services, so if prices were lower in the current year compared to the base year, the deflator would be less than 100. It is possible for the deflator to be less than 100, but it is not mathematically possible for it to be negative.

Is It Possible to Have a GDP Deflator of Less