Question

The value of Nominal GNP of an economy in a particular year is Rs.1400 crore. The value of GNP of that country

during the same year evaluated at the prices of the base year was Rs.1600 crore. Calculate the value of the GNP

deflator of the year in percentage terms. Has the price risen between the base year and the year under consideration?​

Answer 1

Answer:

GNP Deflator =

Real GNP

Nominal GNP

×100=

3,000

2,500

×100=0.83

GNP deflator of 0.83 or 83% indicates that the price level has reduced by 17% between the base year arm the year under consideration.

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