NISM Certifications · NISM-Series-XV: Research Analyst · Economic Analysis
Nominal GDP of an economy grows from Rs 200 lakh crore to Rs 224 lakh crore in a year, while the GDP deflator rises from 100 to 107. What is the approximate real GDP growth rate, to the nearest 0.1 percentage point?
Real GDP growth is about 4.7%. Nominal GDP grew by a factor of 1.12 and the deflator by 1.07, so real growth is 1.12 divided by 1.07 minus one, giving 4.7%. Simply subtracting 7 from 12 gives an inexact 5.0%.
- A12.0%
- B7.0%
- C4.7%Correct
- D5.0%
Explanation
Nominal growth is 224/200 = 1.12. Deflator growth is 1.07. Real growth = 1.12/1.07 - 1 = 0.04673, or about 4.7%. Check: real GDP base 200 and new 224/1.07 = 209.35, which is 4.7% higher. Subtracting 7 from 12 gives 5.0%, which is only an approximation and not the exact figure.
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