Refer to the information provided in Table 21.10 below to answer the question(s) that follow.
Table 21.10
-Refer to Table 21.10. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's GDP deflator in year 1 is
A) 98.
B) 100.
C) 112.
D) 120.

Question

Refer to the information provided in Table 21.10 below to answer the question(s) that follow.
Table 21.10 
-Refer to Table 21.10. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's GDP deflator in year 1 is
A) 98. 
B) 100. 
C) 112. 
D) 120.

Quizplus · Accepted Answer

The GDP deflator for year 1 is calculated by dividing the nominal GDP by the real GDP and multiplying by 100:
GDP deflator for year 1 = (Nominal GDP / Real GDP) x 100
= (110 + 60) / (100 + 50) x 100
= 170 / 150 x 100
= 113.33 (rounded to 2 decimal places)
Since year 1 is the base year, the GDP deflator for year 1 is 100. Therefore, the best choice is B.

Refer to the Information Provided in Table 21