Answer:
True
Explanation:
The GDP deflator is used to measure the changes in prices of goods and services produced in an economy within a given year range. It is the measure of inflation.
Similarly, the Inflation rate is the rate at which the prices of goods and services in an economy increases over the years.
The difference of the GDP deflators from the years in question divided by the initial year GDP deflator gives the inflation rate (this can be multiplied by 100 to get the percentage inflation rate).
Inflation rate = [tex]\frac{GDPD1-GDPD2}{GDP1} \\[/tex] * 100%
where GDPD1 is GDP deflator for the first year;
GDPD2 is GDP deflator for the second year.
The gdp deflator can be used to calculate the inflation rate in the economy, therefore, the correct option is true.
The gross domestic deflator is used to measure Inflation. It is a measure of the level of prices for the new goods that are produced in an economy.
To calculate the GDP deflator, one has to divide the nominal GDP by the real GDP and then multiply the value that is gotten by 100.
In conclusion, the correct option is True.
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