An economy has nominal GDP of ₹1320 crore and real GDP of ₹1100 crore. What is the GDP deflator?
Answer and explanation
Correct answer: 120
The GDP deflator formula is (Nominal GDP ÷ Real GDP) × 100. Substituting the given values gives (1320 ÷ 1100) × 100 = 1.2 × 100 = 120. Thus option C is correct. A value of 120 indicates that the aggregate price level of domestically produced final output is 20 percent above the base-year level, not that output itself rose by 120 percent.
Frequently asked questions
What is the correct answer to this question?
120
Why is this the correct answer?
The GDP deflator formula is (Nominal GDP ÷ Real GDP) × 100. Substituting the given values gives (1320 ÷ 1100) × 100 = 1.2 × 100 = 120. Thus option C is correct. A value of 120 indicates that the aggregate price level of domestically produced final output is 20 percent above the base-year level, not that output itself rose by 120 percent.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: Indian Economy on the Eve of Independence.
