If the Base Year for the GDP Deflator Is 2005

question 134

Multiple Choice

If the base year for the GDP deflator is 2005 and the value of the deflator during 2011 is 115, this indicates that the general level of prices

• A) declined by 15 percent between 2005 and 2011.
• B) increased by 15 percent each year during 2005-2011.
• C) was approximately 15 percent higher in 2011 than in 2005.
• D) was approximately 115 percent higher in 2011 than in 2005.

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Definitions:

Negative Goodwill

Occurs when a company acquires another for a price less than the fair value of its assets. It is recognized as a gain in the acquirer's income statement.

Identifiable Net Assets

These are assets of an acquired entity that can be clearly identified and valued at the time of acquisition.

Fair Value

An estimate of the price at which an asset would trade in a fair market.

Price Paid

The total amount of money exchanged for a good or service at the time of purchase or transaction.