In 2010, real GDP was $13.2 trillion (using 2005 prices) and nominal GDP was $14.6 trillion. Based on the GDP deflator, prices in 2010 were about _____ than prices in 2005.
A) 9.6% lower
B) 9.6% higher
C) 10.6% lower
D) 10.6% higher

Question

Quizplus · Accepted Answer

The GDP deflator is calculated by dividing nominal GDP by real GDP and multiplying by 100. In this case, the GDP deflator is 14.6 / 13.2 * 100 = 110.6. This means that prices in 2010 were 10.6% higher than prices in 2005.

In 2010, Real GDP Was $13