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:

Import Quota

A government-imposed limit on the quantity of a certain good that can be imported into a country over a specified period of time.

World Price

The international market price of a good or service, determined by global supply and demand conditions.

Net Welfare Loss

The loss of social welfare, typically due to inefficient market conditions or government interventions.

Specific Tariff

A fixed fee imposed by a government on imported or exported goods, which is based on the quantity of the item rather than its value.