Suppose that our GDP fell from one year to the next.

A) The GDP deflator definitely fell.
B) Real GDP definitely fell.
C) Both real GDP and the GDP deflator definitely fell.
D) None of the choices are correct.

GDP Deflator

An economic metric that converts output measured at current prices into constant-dollar GDP, removing the effects of inflation to compare one period with another.

Real GDP

Inflation-adjusted GDP, which presents a truer picture of an economy's magnitude and growth patterns over time.