The GDP deflator is designed to adjust nominal GDP
A) for changes in the unemployment rate.
B) for changes in prices.
C) for problems that arise because of externalities.
D) for changes in interest rates.

Question

Quizplus · Accepted Answer

The GDP deflator is designed to adjust nominal GDP for changes in prices. It measures the level of prices of all new, domestically produced, final goods and services in an economy, and is used to convert nominal GDP to real GDP, providing a more accurate measurement of economic growth. The unemployment rate, externalities, and interest rates are not directly related to the GDP deflator.

The GDP Deflator Is Designed to Adjust Nominal GDP