Question Details

The value of Nominal GDP is $ 1100 and the value of Real GDP is $ 1000. Find the value of GDP deflator.

Options

A

0.9

B

1.1

C

1

D

0.8

Show Answer

Correct Answer :

Option B

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:

GDP Deflator = Nominal GDP Real GDP

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:

GDP Deflator = 1100 1000

Simplifying the division:

GDP Deflator = 1.1

Thus, the value of the GDP deflator is 1.1, which matches the correct option.

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