CA Foundation · Business Economics · Determination of National Income
In a year, an economy's nominal GDP is ₹360 lakh crore and its GDP deflator (base year = 100) is 120. What is the real GDP of the economy?
Real GDP equals nominal GDP divided by the deflator and multiplied by 100, so 360 ÷ 120 × 100 gives ₹300 lakh crore. Multiplying instead of dividing would wrongly inflate the figure to ₹432 lakh crore.
- A₹432 lakh crore
- B₹300 lakh croreCorrect
- C₹240 lakh crore
- D₹330 lakh crore
Explanation
Real GDP = Nominal GDP / Deflator × 100 = 360/120 × 100 = ₹300 lakh crore. Check: 300 × 1.20 = 360. Option A multiplies by 1.2 instead of dividing, which is the wrong operation.
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