Question

Earlier we used inflation, deflation, and disinflation and we will be explaining all of them with AD and SRAS. Which one or ones of the following is an example of deflation?

Group of answer choices

real GDP goes from $17 trillion to $17.8 trillion to $18 trillion

the CPI goes from 260 to 266 to 268

nominal GDP goes from $18 trillion to $17 trillion to $17.5 trillion

GDP deflator goes from 133 to 132 to 130

the labor force grows from 160 million to 170 million to 190 million

the GDP deflator goes from 110 to 115.

Answer 1

Deflation is the decrease in general price level and it is opposite of inflation. General price level is measured by a price index which can be GDP deflator. Real GDP deflator is decreasing from 133 to 132 and finally to 130. This is shows that there is a deflation because GDP deflator is reducing

Select GDP deflator goes from 133 to 132 to 130