If the GDP deflator rises from 185 to 190, what is the percentage increase in the price level between the two years?Group of answer choices270%50%5%2.7%
Question
If the GDP deflator rises from 185 to 190, what is the percentage increase in the price level between the two years?
Group of answer choices
- 270%
- 50%
- 5%
- 2.7%
Solution
The percentage increase in the price level between the two years can be calculated using the formula for percentage change:
Percentage Change = [(New Value - Old Value) / Old Value] * 100%
Here, the new value is 190 and the old value is 185.
So, the percentage change = [(190 - 185) / 185] * 100%
= [5 / 185] * 100%
= 0.027 * 100%
= 2.7%
So, the percentage increase in the price level between the two years is 2.7%.
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