Practicing Success
Suppose price index/GDP deflator is 300, what comprehensions can be made from it? |
Implies that real income is more than the nominal income Implies that final value of goods and services is in negative Implies that price level has gone up by 300% All of the above |
Implies that price level has gone up by 300% |
Price index/GDP deflator eliminates the effect of price change and to determine the actual change in the physical output during the year. If the deflator is 300, then we can say that the price level has gone up by 300%. |