CA Foundation · Business Economics · Determination of National Income
An economy's nominal GDP rises from ₹200 lakh crore in 2022-23 to ₹264 lakh crore in 2023-24. Over the same period the GDP deflator rises from 100 to 120. What is the growth rate of real GDP?
Real GDP rose by 10 per cent. Deflating 2023-24 nominal GDP of 264 by 120 gives 220, against 200 in the earlier year. Nominal growth of 32 per cent overstates growth because it includes the 20 per cent price increase.
- A10%Correct
- B20%
- C32%
- D12%
Explanation
Real GDP in 2022-23 = 200/100 × 100 = 200. Real GDP in 2023-24 = 264/120 × 100 = 220. Growth = (220 − 200)/200 = 10%. Option C is the nominal growth, which ignores the price rise.
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