If the GDP Deflator in 2009 Was 120 Compared to a Value

question 193

Multiple Choice

If the GDP deflator in 2009 was 120 compared to a value of 100 during the 2004 base year, this would indicate that

• A) the inflation rate during 2009 was 20 percent.
• B) the general level of prices during 2009 was 20 percent higher than during 2004.
• C) the inflation rate during 2009 was 120 percent.
• D) real GDP was 20 percent higher in 2009 than 2004.

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Definitions:

Finished Goods

Goods that are fully manufactured and available for sale to buyers.

Raw Materials Used

The total quantity of raw components consumed in the production process to manufacture goods.

Raw Materials Inventory

The total cost of all the components lying in a manufacturing or production facility that have not yet been used or processed.

Underapplied Overhead

Occurs when the allocated manufacturing overhead cost is less than the actual overhead incurred, leading to under-recovered expenses.