The nominal GNP of an economy in a year is Rs 3,300 crore and its GNP deflator for that year is 110 (per cent). What is the value of its GNP at base-year prices?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs 3,000 crore
Given:
Nominal GNP = Rs 3,300 crore
GNP deflator = 110 (per cent)
A GNP deflator works like the GDP deflator: deflator = (nominal ÷ real) × 100.
110 = (3,300 ÷ Real GNP) × 100
Real GNP = 3,300 × 100 ÷ 110 = Rs 3,000 crore
Prices have risen by 10 per cent since the base year, so GNP at base-year prices is smaller than nominal GNP.
NCERT (2026-27): “2.4 Nominal and Real GDP … The ratio of nominal to real GDP is a well known index of prices. This is called GDP Deflator. Thus if GDP stands for nominal GDP and gdp stands for real GDP then, GDP deflator = GDP gdp . Sometimes the deflator is also denoted in percentage terms. …” “2.4 Nominal and Real GDP … Like GDP deflator, we can have GNP deflator as well. …” |