If a Country's real GDP is Rs.400 crores and its nominal GDP is Rs.1000 crores, its GDP deflator is:
(Choose the correct alternative).
Answer & explanation
Correct answer: option 1
The correct answer is Option 1: 250
GDP deflator is basically calculated to eliminate the effect of any price change and calculate the real change in total output. GDP deflator = \(\frac{\text { Nominal GDP}}{\text {Real GDP }}\) * 100
According to the question,
GDP deflator = $\frac{\text { Nominal GDP}}{\text {Real GDP }} * 100$
GDP deflator = \(\frac{\text {1000}}{\text {400 }}\) * 100
GDP deflator = \(\frac{\text {5}}{\text {2 }}\) * 100
GDP deflator = 250
Note: The given answer is as per NTA. However, Option 3 can also be answer to this question as per NCERT. GDP deflator = Nominal GDP / Real GDP → this gives a ratio (times) i.e. 1000/400 = 2.5 times.