A country in the year 2000 produced 100 units of bread at price of Rs 10 per bread. GDP at current price was Rs 1,000. In 2001 the same country produced 110 units of bread at price Rs 15 per bread. What is the GDP deflator?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 150 percent.
Base Year (2000):
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Quantity = 100 units
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Price = Rs 10
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Nominal GDP = 100 × 10 = Rs 1,000
Current Year (2001):
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Quantity = 110 units
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Price = Rs 15
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Nominal GDP (2001) = 110 × 15 = Rs 1,650
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Real GDP (2001) = 110 × 10 = Rs 1,100 (using base year prices)
GDP Deflator = (Nominal GDP /Real GDP) * 100
= (1650 / 1100) * 100 = 150%