If the GDP Deflator in 2011 Was 130 Compared to a Value

question 68

Multiple Choice

If the GDP deflator in 2011 was 130 compared to a value of 100 during the 2005 base year, this would indicate that

• A) the inflation rate during 2011 was 30 percent.
• B) the general level of prices during 2011 was 30 percent higher than during 2005.
• C) the inflation rate during 2011 was 130 percent.
• D) nominal GDP grew by 30 percent during 2011.
• E) real GDP was 30 percent higher in 2011 than 2005.

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Definitions:

Price Elasticity

The measure of how much the quantity demanded or supplied of a good changes in response to a change in its price.

Price Doubles

A situation where the price of a good, service, or commodity increases to twice its previous level, affecting supply and demand dynamics.

Intensive Margin

The degree to which factors of production, such as labor, are utilized more intensely to increase output in the short term.

Consumption Changes

Variations in the amount and types of goods and services used by households over time.