Question

The value of the nominal GNP of an economy was Rs 2,500 crores in a particular year. The value of GNP of that country during the same year, evaluated at the prices of same base year, was Rs 3,000 crores. Calculate the value of the GNP deflator of the year in percentage terms. Has the price level risen between the base year and the year under consideration?

Answer 1

Nominal GNP = Rs.2500

Real GNP = Rs.3000

`"GNP Deflator "= "Nominal GNP"/"RReal GNP"xx100`

So,

`"GNP Deflator "=2500/3000xx100=83.33%`

No, the price level has fallen down by 16.67 % [(100 − 83.33)%]