A country reported nominal GDP of $200 billion in 2010 and $180 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 105 in 2009. Between 2009 and 2010, how much did prices increase?

19%

Explanation:

Given that,

Nominal GDP in 2010 = $200 billion

Nominal GDP in 2009 = $180 billion

GDP deflator in 2010 = 125

GDP deflator in 2009 = 105

Percentage change in prices:

= Percentage change in GDP deflator

= (Change in GDP deflator : GDP deflator in 2009) * 100

= [ (125 - 105) : 105] * 100

= (20 : 105) * 100

= 0.19 * 100

= 19%

Therefore, the prices increases by 19%.