Under What Circumstances Would the GDP Deflator Be Less Than

question 100

Multiple Choice

Under what circumstances would the GDP deflator be less than 100 after the base year?

• A)The GDP deflator will be less than 100 if there has been inflation relative to the base year.
• B)The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year.
• C)The GDP deflator will be less than 100 if there has been deflation relative to the base year.
• D)There are no circumstances under which the GDP deflator could be less than 100.

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Definitions:

Perfect Knowledge

A hypothetical situation where all parties in a market have complete and accurate information about the market conditions and the goods or services involved.

Competitive Markets

Competitive markets are characterized by many buyers and sellers, where no single entity has the power to significantly influence prices for goods and services.

Economic Profits

Profits exceeding the total costs of inputs including opportunity costs, typically representing gains beyond the normal profit levels.

Economic Losses

Financial deficits incurred by businesses or individuals, often resulting from poor investment decisions or market downturns.