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CA Foundation · Business Economics · Determination of National Income

India's Real Gross Domestic Product (Real GDP) increased from ₹160 lakh crore in 2022-23 to ₹175 lakh crore in 2023-24 at constant prices. However, during the same period, the price index moved from 100 to 115. What was the growth in Nominal GDP during this period?

Nominal GDP growth incorporates both real growth and inflation. With 9.375% real growth and 15% inflation, nominal GDP grew by approximately 25.2%, calculated as (1.09375 × 1.15) – 1.

  1. A9.4%
  2. B15.8%
  3. C25.2%Correct
  4. D34.6%

Explanation

Real GDP grew by 9.375% [(175-160)/160 × 100]. Nominal GDP growth reflects both volume and price changes. The price index increased by 15% (115/100 = 1.15). Nominal GDP = Real GDP × Price Index. Growth in Nominal GDP = (1.09375 × 1.15) - 1 = 1.258 - 1 = 25.8%, approximately 25.2%. Option 1 shows only volume growth; option 2 shows only price change.

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