Suppose in 1980 nominal GDP in country F was equal to $500 and in 2000 was equal to $2400. The GDP deflator was 100 and 500, respectively. Which one is true:

a) Country F in 2000 was richer, in real terms, than in 1980
b)prices have increased faster than nominal GDP
c)there has been an annual rate of inflation of 1%
d)real GDP has remained unchanged

i think its between b or c, please help.

To determine which statement is true, we need to understand the concepts of nominal GDP, real GDP, and the GDP deflator.

Nominal GDP measures the total value of goods and services produced in an economy at current market prices. Real GDP, on the other hand, adjusts nominal GDP for inflation by using a base year's prices, providing a measure of economic output adjusted for changes in price levels. The GDP deflator is a measure of price level changes in an economy.

Let's examine each statement and determine which one is correct:

a) Country F in 2000 was richer, in real terms, than in 1980.
To assess this statement, we need to compare the real GDP in 1980 and 2000. Real GDP is calculated by dividing the nominal GDP by the GDP deflator. In 1980, the real GDP would be $500/100 = $5, and in 2000, it would be $2400/500 = $4.8. As the real GDP decreased over time, this statement is incorrect.

b) Prices have increased faster than nominal GDP.
To determine if this statement is true, we compare the changes in prices measured by the GDP deflator to the changes in nominal GDP. The change in the GDP deflator from 1980 to 2000 is 500 - 100 = 400, while the change in nominal GDP is 2400 - 500 = 1900. Since the change in the GDP deflator is greater than the change in nominal GDP, this statement is correct.

c) There has been an annual rate of inflation of 1%.
The statement does not provide us with the necessary information to directly calculate the annual rate of inflation. Therefore, we cannot ascertain if this statement is true or false based on the given data.

d) Real GDP has remained unchanged.
As previously calculated, the real GDP in 1980 was $5, and in 2000 it was $4.8. Since the real GDP has changed over time, this statement is false.

Based on our analysis, the correct statement is b) Prices have increased faster than nominal GDP.