The GDP Deflator in Year 2 Is 95 Using Year

question 155

Multiple Choice

The GDP deflator in year 2 is 95 using year 1 as a base year. This means that, on average, the price of goods and services is

• A) 105% higher in year 2 than in year 1.
• B) 5% higher in year 2 than in year 1.
• C) 5% higher in year 1 than in year 2.
• D) 105% higher in year 1 than in year 2.

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Definitions:

Payoff Matrix

A tool used in game theory to show the potential outcomes of different strategies players might employ, including their associated rewards or costs.

Repeated Game

A strategic interaction (game) between two or more parties (players) that all parties know will take place repeatedly.

High-Price Strategy

A pricing strategy where goods or services are sold at a higher price point to suggest luxury or exclusivity, often maximizing profit from each sale.

Nash Equilibrium

A concept in game theory where no player can benefit by changing strategies while the other players keep their strategies unchanged.