Nominal GDP Is $10,000 Billion in 2011, but Real GDP

question 90

Multiple Choice

Nominal GDP is $10,000 billion in 2011, but real GDP is only $9,000. It follows that:

• A)​the GDP deflator is equal to 111.
• B)​the GDP deflator is equal to 100.
• C)​the GDP deflator is equal to 90.
• D)​prices must have decreased relative to the base year.

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Definitions:

Marginal Tax Rate

The percentage at which the last dollar of income is taxed, indicating how much tax will be paid on an additional dollar of income.

Decreased

A reduction in the quantity, size, intensity, or extent of something.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating how much tax will be paid on an additional dollar of income.

Federal Taxes

Mandatory financial charges collected by the federal government to fund public services and projects.