A GDP Deflator of 112 Means

question 13

Multiple Choice

A GDP deflator of 112 means:

• A) the overall price level is 12 percent higher than in the base year.
• B) overall output increased by 12 percent since the base year.
• C) the overall price level is 12 percent lower than in the base year.
• D) both production and the overall price level have increased by 12 percent compared to the base year.

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Definitions:

Straight-line Method

A method of depreciation that allocates an equal amount of the asset's cost to each year of its useful life.

Units-of-activity Method

A depreciation method that allocates an asset's cost based on its usage, activities, or units produced, rather than the passage of time.

Double-declining-balance Method

An accelerated depreciation method that doubles the depreciation expense compared to the straight-line method.

Depreciation Expense

Systematically dividing the expense of a tangible asset over the period it remains useful.