Is It Possible to Have a GDP Deflator of Less

question 18

Multiple Choice

Is it possible to have a GDP deflator of less than 100?

• A) Yes, it would indicate a year when prices were lower than in the base year.
• B) Yes, it would indicate a year when output was lower than in the base year.
• C) No, that is mathematically impossible for the deflator to be less than 100.
• D) Yes, it would indicate a year when prices were lower than in the previous year.

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Definitions:

Year 1

Indicates the first year of a specific period of time, operation, or accounting period, setting the baseline for subsequent years.

Net Operating Income

The profit a company makes from its core business operations, excluding deductions of interest and taxes.

Operating Loss

A loss incurred when a company's operating expenses exceed its gross profits or revenues, indicating that the core operations are not profitable.

Absorption Costing

Absorption Costing is an accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.