The value of Nominal GDP is $ 1100 and the value of Real GDP is $ 1000. Find the value of GDP deflator.
Correct Answer :
1.1
Solution :
The correct option is 1.1.
To find the value of the GDP deflator, we use the standard economic formula that relates Nominal GDP, Real GDP, and the GDP deflator:
Note: Sometimes the GDP deflator is expressed as an index (multiplied by 100). However, based on the provided options, it is expressed here as a simple ratio.
From the question, we are given the following values:
- Nominal GDP = $ 1100
- Real GDP = $ 1000
Substituting these values into the formula, we get:
Simplifying the division:
Thus, the value of the GDP deflator is 1.1, which matches the correct option.
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