The Gross domestic product price deflator evaluates the differences in costs of entire goods and services manufactured in an economy. GDP indicates the total production of goods and services.
However, when GDP falls and rises, the metric doesn’t acknowledge the impact of rising prices or inflation. The GDP deflator displays the various range of price changes on GDP by first initiating a base year, and then relating the present rate to the prices of the base year.
Given below are important MCQs on GDP deflator to analyze your understanding of the topic. The answers are also given for your reference.
GDP Deflator MCQs:
1. What was the Inflation percentage between 2000 and 2001?
A) 6.3 per cent
B) 3.8 per cent
C) 3.0 percent
D) 2.5 percent
2. What was the estimated real GDP change percentage between 2000 and 2002?
A) 7.0 percent
B) 11.0 percent
C) 14.7 percent
D) 18.5 percent
3. GDP deflator
A) Evaluates inflation by utilizing present production basket
B) Shows real GDP growth on the basis of current production
C) The GDP deflator is in real terms while the CPI is in nominal terms
D) None of the above
4. An increase in aggregate demand results in
A) The cost to increase in the long term
B) GDP to increase in the long term
C) The cost to increase in the short run
D) GDP to increase in the short term
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