Final answer:
When the GDP Deflator is above 100, it indicates that the economy has experienced inflation, which means there has been an increase in the general price level since the base year.
Step-by-step explanation:
If the GDP Deflator is greater than 100, then the economy has seen a positive change in price level since the base year. In other words, the economy has experienced inflation. The GDP Deflator is a measure that reflects the change in average price levels of all goods and services included in GDP. When the deflator is above 100, it signals that prices have increased relative to the base year, which is indicative of inflation.
Using the provided information, we can observe that the price level in 2010 was almost six times higher than in 1960, with a deflator for 2010 at 110 compared to a level of 19 in 1960. This dramatic rise in the GDP Deflator clearly indicates that the growth in nominal GDP has been largely affected by inflation. To get a true measure of economic growth, one must look at real GDP, which adjusts nominal GDP by removing the effects of price changes.