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20 February, 15:25

Suppose nominal GDP in an economy is $11 trillion and real GDP is $10 trillion. What would be the implicit price deflator?

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  1. 20 February, 15:54
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    The implicit price deflator will be 1.10

    Explanation:

    Nominal GDP = $11 trillion

    Real GDP = $10 trillion

    Use Implicit price deflator formula

    Implicit price deflator = Nominal GDP / Real GDP

    Implicit price deflator = $11 trillion / 10 trillion

    Implicit price deflator = 1.10

    So, The implicit price deflator will be 1.10 when the nominal GDP is $11 trillion and real GDP is $10 trillion.
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