If Nominal GDP Is $10,000 and Real GDP Is $8,000

question 103

True/False

If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.

---

Definitions:

Overconfidence

The belief that your abilities are better than they really are.

Underestimating

Underestimating refers to the act of evaluating something as less powerful, important, or serious than it actually is, which can lead to miscalculations in finance and planning.

Anchoring And Adjustment

A cognitive heuristic where individuals rely too heavily on an initial piece of information (anchor) when making decisions, adjusting insufficiently from that anchor.

Frame Dependence

The tendency of individuals to make different (and potentially inconsistent) decisions depending on how a question or problem is framed.