Which of the following pairs is correctly matched?

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → GDP deflator – ratio of nominal GDP to real GDP

The GDP deflator is the ratio of nominal GDP to real GDP.

Option (1) Consumer Price Index – prices at which goods are traded in bulk — Incorrect. Prices at which goods are traded in bulk are wholesale prices (WPI).

Option (2) Base year – the year whose current prices give nominal GDP of every year — Incorrect. The base year’s prices are used to calculate real GDP, not nominal GDP.

Option (3) Wholesale Price Index – prices of a basket bought by the representative consumer — Incorrect. A basket bought by the representative consumer is the base of the CPI.

Option (4) GDP deflator – ratio of nominal GDP to real GDP — Correct. The ratio of nominal to real GDP is the GDP deflator.

NCERT (2026-27): “2.4 Nominal and Real GDP … Notice that the ratio of nominal GDP to real GDP gives us an idea of how the prices have moved from the base year (the year whose prices are being used to calculate the real GDP) to the current year. In the calculation of real and nominal GDP of the current year, the volume of production is fixed. Therefore, if these measures differ it is only due to change in the price level between the base year and the current year. The ratio of nominal to real GDP is a well known index of prices. This is called GDP Deflator. …”

“2.4 Nominal and Real GDP It is worth noting that many commodities have two sets of prices. One is the retail price which the consumer actually pays. The other is the wholesale price, the price at which goods are traded in bulk. These two may differ in value because of the margin kept by traders. Goods which are traded in bulk (such as raw materials or semi-finished goods) are not purchased by ordinary consumers. Like CPI, the index for wholesale prices is called Wholesale Price Index (WPI). …”