Base-year prices of wheat and cloth are ₹25 and ₹80. Current-year quantities are 60 and 15 units respectively. What is real GDP?
Answer and explanation
Correct answer: ₹2700
Real GDP values current-year quantities at base-year prices, thereby holding prices constant and isolating output changes. Wheat contributes 60 × ₹25 = ₹1,500, while cloth contributes 15 × ₹80 = ₹1,200. Adding them gives real GDP = ₹1,500 + ₹1,200 = ₹2,700. Therefore option C is correct. Using current prices would calculate nominal GDP, not real GDP.
Frequently asked questions
What is the correct answer to this question?
₹2700
Why is this the correct answer?
Real GDP values current-year quantities at base-year prices, thereby holding prices constant and isolating output changes. Wheat contributes 60 × ₹25 = ₹1,500, while cloth contributes 15 × ₹80 = ₹1,200. Adding them gives real GDP = ₹1,500 + ₹1,200 = ₹2,700. Therefore option C is correct. Using current prices would calculate nominal GDP, not real GDP.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
