Suppose That a Nation's Nominal GDP Is $972 Billion and the GDP

question 26

Multiple Choice

Suppose that a nation's nominal GDP is $972 billion and the GDP deflator is 90.In order to make this year's GDP comparable to the reference year GDP,this year's GDP must be:

• A)adjusted downward to $687 billion
• B)deflated to $896 billion
• C)inflated to $1080 billion
• D)deflated to $875 billion
• E)inflated to $896 billion

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Definitions:

Deadweight Loss

A reduction in economic effectiveness occurring when a good or service doesn't attain market equilibrium in an unrestricted market scenario.

Elastic Supply

A situation where the quantity supplied changes significantly in response to changes in price.

Elastic Demand

A situation where the demand for a product or service significantly changes in response to a change in price.

Inelastic Supply

A situation where the quantity supplied of a good is not significantly affected by a change in price.