The GDP deflator reflects the
A)level of prices in the base year relative to the current level of prices.
B)current level of prices relative to the level of prices in the base year.
C)level of real output in the base year relative to the current level of real output.
D)current level of real output relative to the level of real output in the base year.

Question

Quizplus · Accepted Answer

The GDP deflator is a measure of the average level of prices for all final goods and services produced within an economy. It is calculated by dividing nominal GDP by real GDP and multiplying by 100. Therefore, it reflects the current level of prices relative to the level of prices in the base year.

The GDP Deflator Reflects the