CA Foundation · Business Economics · Determination of National Income
In an economy, nominal GDP in the current year is ₹990 crore and the GDP deflator is 110 (base year = 100). What is the real GDP for the current year?
Real GDP is ₹900 crore. It is found by dividing nominal GDP of ₹990 crore by the deflator of 110 and multiplying by 100. This removes the 10 percent price rise from nominal GDP, leaving output valued at base-year prices.
- A₹900 croreCorrect
- B₹1,089 crore
- C₹880 crore
- D₹990 crore
Explanation
Real GDP = Nominal GDP / Deflator × 100 = 990/110 × 100 = ₹900 crore. Check: 900 × 110/100 = 990. Option B multiplies by the deflator instead of dividing, which is the wrong operation.
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