The GDP Deflator in Year 3 Is 135 Using Year

question 284

Multiple Choice

The GDP deflator in year 3 is 135 using year 1 as a base year. This means that, on average, the price of goods and services is

• A) 135% higher in year 3 than in year 1.
• B) 17.5% higher in year 3 than in year 1.
• C) 35% higher in year 3 than in year 1.
• D) 17.5% higher in year 1 than in year 3.

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Definitions:

AVC Curve

Average Variable Cost Curve, it represents the change in variable cost associated with producing more units of a good or service.

Variable Input

An input in the production process that can be altered in the short term to adjust the level of output.

Output

Output is the total amount of goods and services produced by an economy or business over a set period, quantifying productivity and economic activity.

Short Run

A period in economics where at least one input (e.g., capital) is fixed, focusing on immediate effects rather than long-term outcomes.