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SubjectsEconomics
जीडीपी अपस्फीतिकारक
In Class 12 Economics, under National Income and Related Aggregates, students learn how the GDP Deflator measures the overall change in prices of goods and services produced within an economy. The topic explains its relationship with nominal GDP and real GDP, the role of a base year, and the formula: GDP Deflator = (Nominal GDP ÷ Real GDP) × 100. Students also interpret changes in the index to understand inflation and distinguish price effects from changes in production.
Correct answer: A. 10 percent
Explanation: Inflation is the percentage increase relative to the initial price index. The change in the deflator is 132 − 120 = 12, and the rate is (12 ÷ 120) × 100 = 10%. Therefore option A is correct. Option D treats the new index as the rate, while 12% is only the point increase, not the percentage increase.
Correct answer: B. 20 percent
Explanation: The governing concept is percentage change, which uses the original value as the denominator. The GDP deflator falls by 150 − 120 = 30 points. Therefore, the percentage decline is (30 ÷ 150) × 100 = 20%. Option B is correct. The value 30 is only the index-point fall, not the percentage; the other choices result from incorrect arithmetic or denominators.
Correct answer: C. (New Deflator − Old Deflator) ÷ Old Deflator × 100
Explanation: Inflation measures the percentage rise from the old price level to the new price level. Therefore, inflation = [(New Deflator − Old Deflator) ÷ Old Deflator] × 100, which is option C. The old value is the base for comparison. Option A reverses the change and denominator, option B gives an index ratio, and option D is not a percentage-change formula.
Correct answer: D. Rate of inflation or deflation
Explanation: Comparing GDP deflators for consecutive years reveals the change in the overall price level of domestically produced final goods and services. The percentage change, [(new deflator − old deflator) ÷ old deflator] × 100, indicates inflation when positive and deflation when negative. Therefore option D is correct; the other choices are unrelated indicators.
Correct answer: B. Because it includes a wide range of domestic final goods and services
Explanation: The GDP deflator is broad because it covers the prices of a wide range of final goods and services produced domestically, with weights based on current domestic output. It is not restricted to food, imports, or wages. Thus option B correctly describes its coverage. Unlike a narrow item-specific index, it reflects the overall price movement of domestic final production.
Correct answer: C. GDP deflator
Explanation: A newly produced domestic machine is part of current domestic final output and is generally treated as a capital good. If its price rises, the value of nominal GDP can rise relative to real GDP, directly affecting the GDP deflator. Therefore option C is correct. Population, imports alone, and unemployment do not follow directly from the stated price change.
Correct answer: D. There will be no direct effect
Explanation: The GDP deflator measures the price change of final goods and services produced within the domestic economy. Imported oil is not domestic production, so its price increase is excluded directly from the GDP deflator. It may affect domestic costs indirectly later, but that secondary effect is not given here. Therefore, option D is correct; the other options make unsupported claims.
Correct answer: A. ₹1150 crore
Explanation: The governing relationship is GDP deflator = (Nominal GDP ÷ Real GDP) × 100. Rearranging gives Nominal GDP = Real GDP × Deflator ÷ 100. Thus, nominal GDP = 1000 × 115 ÷ 100 = ₹1150 crore. Option A is correct. Option C ignores the price adjustment, while the other numerical choices do not follow the formula.
Correct answer: B. 85
Explanation: The GDP deflator is calculated as (Nominal GDP ÷ Real GDP) × 100. Substituting the given values gives (1020 ÷ 1200) × 100 = 85. Therefore, option B is correct. A value of 85 means the measured price level is 15 percent below the base-year level, assuming the usual base-year index of 100. The other values result from incorrect division or interpretation.
Correct answer: C. Nominal GDP will be higher than real GDP
Explanation: The deflator equals (Nominal GDP ÷ Real GDP) × 100. If it is greater than 100, the ratio of nominal GDP to real GDP is greater than one, so nominal GDP is generally higher than real GDP. This reflects a current price level above the base-year price level. Option C is correct; the other choices contradict the index relationship or make an irrelevant claim.
Correct answer: B. The average domestic price level has fallen
Explanation: The GDP deflator tracks the average price level of final goods and services produced domestically, relative to the base year. A fall in the deflator therefore indicates that this average domestic price level has declined, all else being appropriately interpreted. It does not by itself establish changes in population, real output, or imports. Hence option B is the only justified conclusion.
Correct answer: C. 130
Explanation: Use the GDP-deflator formula: (Nominal GDP ÷ Real GDP) × 100. With the given figures, (1170 ÷ 900) × 100 = 1.3 × 100 = 130. Therefore, option C is correct. The index value of 130 indicates that the relevant price level is 30 percent above the base-year level. The other options do not result from the stated formula.
Correct answer: C. ₹1200 crore
Explanation: From GDP deflator = (Nominal GDP ÷ Real GDP) × 100, nominal GDP equals real GDP × deflator ÷ 100. Therefore, nominal GDP = 960 × 125 ÷ 100 = 12 × 125 = ₹1200 crore. Option C is correct. The other options do not apply the 125 index proportionately to the real GDP figure.
Correct answer: C. ₹900 crore
Explanation: Rearrange the deflator formula: Real GDP = (Nominal GDP ÷ Deflator) × 100. Substitution gives Real GDP = (1530 ÷ 170) × 100 = 9 × 100 = ₹900 crore. Thus option C is correct. The calculation removes the effect of the price index from nominal GDP; the other choices reflect incorrect division or rounding.
Correct answer: C. 140
Explanation: The GDP deflator is calculated as (Nominal GDP ÷ Real GDP) × 100. If nominal GDP is 40% higher than real GDP, it equals 140% of real GDP, or 1.40 times real GDP. Therefore, the deflator is 1.40 × 100 = 140. Option C is correct. The value 100 would indicate equal nominal and real GDP, while 120 and 160 represent incorrect percentage adjustments.
Correct answer: B. 60
Explanation: The GDP deflator equals (Nominal GDP ÷ Real GDP) × 100. Since nominal GDP is 60% of real GDP, the ratio of nominal GDP to real GDP is 0.60. Thus, the deflator is 0.60 × 100 = 60. Option B is correct. A value of 100 would mean the two GDP measures are equal; 40 is the shortfall from 100, not the deflator, and 160 reverses the given relationship.
Correct answer: D. 112 percent
Explanation: The GDP deflator is an index calculated as (current-year nominal GDP ÷ current-year real GDP) × 100, and the base-year price index is 100. A deflator of 112 therefore means that the current price level is 112% of the base-year price level, or 12% above it. Option D is correct. Twelve percent describes the increase, not the total current level.
Correct answer: C. It will remain unchanged
Explanation: The GDP deflator is (Nominal GDP ÷ Real GDP) × 100. If both nominal and real GDP decline by the same proportion, both values are multiplied by the same factor, so that factor cancels in their ratio. For example, if each falls by 10%, the ratio remains unchanged. Hence the deflator remains unchanged, making Option C correct; it does not automatically rise, fall, or become zero.
Correct answer: C. 100
Explanation: The GDP deflator is calculated as (Nominal GDP / Real GDP) × 100, with real GDP valued at base-year prices. In the base year itself, nominal GDP and real GDP use the same prices and quantities, so their ratio is 1. Multiplying by 100 gives a deflator of 100. Rebasing changes the reference year, not this defining index value.
Correct answer: C. 75 percent
Explanation: A GDP deflator of 175 means the base-year price level is represented by 100, while the current price level is represented by 175. The increase relative to the base is therefore 175 − 100 = 75 index points, or 75 percent. It does not mean prices are 175 percent higher; rather, the current level is 175 percent of the base-year level.
Correct answer: B. 15 percent
Explanation: The GDP deflator is calculated as (Nominal GDP ÷ Real GDP) × 100. Substituting the values gives (2,760 ÷ 2,400) × 100 = 1.15 × 100 = 115. A deflator of 115 means that the measured price level is 115 percent of the base-year level, or 15 percent higher than it. Therefore option B is correct; 115 is the index value, not the percentage increase.
Correct answer: C. 132
Explanation: The GDP deflator index measures the price component of nominal GDP relative to real GDP. Its formula is Deflator = (Nominal GDP index ÷ Real GDP index) × 100. Substituting the values gives (184.8 ÷ 140) × 100 = 132. Therefore, option C is correct. Dividing without multiplying by 100 would give a ratio rather than an index, while 130 and 140 do not satisfy the formula.
Correct answer: C. 172.8
Explanation: The relationship among the indices is Nominal GDP index = (Deflator index × Real GDP index) ÷ 100. Using the given values, nominal index = (135 × 128) ÷ 100 = 17,280 ÷ 100 = 172.8. Therefore, option C is correct. The answer must combine the price and real-output effects; dividing by the deflator or using 135 + 128 would not represent the GDP index relationship.
Correct answer: C. 140
Explanation: To remove the price effect from nominal GDP, divide the nominal GDP index by the deflator and multiply by 100. Thus, Real GDP index = (168 ÷ 120) × 100 = 1.4 × 100 = 140. Option C is correct. A value of 135 results from an incorrect division, while 130 and 145 do not follow the deflator identity: Nominal index = Deflator × Real index ÷ 100.
Correct answer: B. 25 percent
Explanation: Because the deflator represents the price level, compare the change with the year-one index, which is the base. The increase is 150 − 120 = 30 index points. Percentage increase = (30 ÷ 120) × 100 = 25%. Therefore, option B is correct. The 30-point difference is not automatically a 30% increase, and 50% incorrectly uses the second-year value as the base.
