Question

If the GDP Deflator is below 100, which of the following has definitely occurred?

1) Inflation
2) Deflation
3) Stagflation
4) Hyperinflation

Answer 1

If the GDP Deflator is below 100, it indicates deflation, which is a decrease in the general price level.

Step-by-step explanation:

Inflation is an economic situation characterized by a general increase in prices and a decrease in the purchasing power of money. It is measured using a price index, such as the GDP deflator. If the GDP deflator is below 100, it indicates that there has been a decrease in the general price level, which is known as deflation. Deflation is the opposite of inflation and represents a decrease in prices rather than an increase.