If real gross domestic product (GDP) grew by 4 percent and nominal GDP grew by 3 percent, then the inflation rate was a

Economics Jun 06, 2021

If real gross domestic product (GDP) grew by 4 percent and nominal GDP grew by 3 percent, then the inflation rate was a. 1 percent. d. 12 percent. b. -1 percent. e. 0 percent. c. 7 percent.

Expert Solution

Answer

b .

Explanation

Computation of Inflation Rate:

Inflation Rate = Growth of Nominal GDP - Growth of Real GDP

= 3% - 4%

= -1%

So, the inflation rate is -1% The correct option is B "-1%".

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