Question

The GDP Deflator is calculated by dividing real GDP by nominal GDP. a. true b. false

The GDP Deflator is calculated by dividing real GDP by nominal GDP.
a. true
b. false
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Answer #1

False

The GDP Deflator is calculated by dividing Nominal GDP by Real GDP and then mutiplying by 100. The GDP price deflator measures the changes in prices for all of the goods and services produced in an economy. It includes only domestically produced goods.

GDP Deflator = Nominal GDP / Real GDP * 100

Nominal GDP measures the value of goods produced in the economy valued at current market prices. Real GDP measures the value of goods produced in the economy valued at base market prices.

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