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:

Slightly Differentiated Product

A product that is mostly similar to others but has minor differences in quality, features, or branding that set it apart.

Natural Monopoly

A market situation where due to high fixed costs or barriers to entry, it is most efficient for production to be concentrated in a single firm.

Economies Of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Monopolist

A solo seller in a market who has significant control over the pricing and availability of a unique product or service.