The value of Nominal Income when Real income is Rs. 5000 and GDP deflator is 125 percent will be :

Rs. 12,500 Rs. 6,250 Rs. 8,000 Rs. 7,500

Rs. 6,250

The correct answer is option (2) : Rs. 6,250 To find the nominal income, you should use the following formula : Nominal Income= (Real Income * GDP deflator)/100 Given : Real Income = Rs. 5000 GDP Deflator = 125 percent = 125 Nominal Income = (5000*125)/100= 6250