Suppose the GDP Deflator Is 100 in 2009 and 101

question 152

Essay

Suppose the GDP deflator is 100 in 2009 and 101 in 2010.
(A)Suppose the economy is at potential GDP in 2009 and 2010.What is the rate of inflation in 2010?
(B)Suppose instead that real GDP is above potential GDP in 2010.How is the adjustment back to potential made in this situation?

---

Definitions:

Deposit

Money placed in a bank account or given as part of a transaction as a guarantee or prepayment.

Checkbook Stubs

Portions of a checkbook that are kept after the check is written, used to record amounts, payees, and transaction dates.

Deposits

Money placed into a financial account or institution for safekeeping and potential interest accrual.

Deposit Slip

A document provided by a bank for a depositor to fill out, detailing a deposit transaction's specifics such as date and amount.