SSC · Police
The ratio of nominal GDP to real GDP (multiplied by 100) represents the:
Answer (Detailed Solution Below)View answer ▾Hide ▴
Answer: Option A — GDP deflator
Detailed Solution
Gross Domestic Product (GDP) is the total market value of all final goods and services produced within the domestic territory of a country in a given period, usually a year.
GDP can be measured in two ways:
Nominal GDP: GDP calculated at current prices, that is, the prices prevailing in the year in which the output is produced. Nominal GDP can increase either because more goods and services are produced or because prices have gone up.
Real GDP: GDP calculated at constant prices, that is, the prices of a fixed base year. Since prices are kept constant, real GDP changes only when the actual quantity of goods and services changes. It is therefore a better measure of economic growth.
The GDP deflator is defined as:
GDP deflator = (Nominal GDP / Real GDP) × 100
It measures the change in the general price level of all goods and services produced in the economy, compared with the base year. It is also called the implicit price deflator, because it is not calculated directly from a basket of prices but is derived from the two GDP figures.
The GDP deflator is the broadest measure of inflation, because it covers all goods and services included in GDP, including investment goods, government services and exports, and not just a fixed basket. Unlike the Consumer Price Index (CPI), it does not include imported goods, and its basket changes every year with the pattern of production.
In India, GDP estimates are released by the National Statistics Office (NSO), under the Ministry of Statistics and Programme Implementation (MoSPI). The base year of the national accounts series was 2011-12 for many years, and MoSPI has been moving the series to a new base year, 2022-23.
Why not the other options?
- ✗The Consumer Price Index measures changes in retail prices of a fixed basket of consumer goods and services.
- ✗Per capita income is national income divided by population.
- ✗The growth rate is the percentage change in real GDP from one year to the next.
Quick tip
Remember: GDP deflator = (nominal GDP / real GDP) × 100, the implicit price deflator and broadest measure of inflation; nominal GDP = current prices; real GDP = constant (base-year) prices.
💬 Discussions on this question
Ask a doubt ›Still stuck on this question? Ask our faculty and fellow students — answers appear here.
Ask a doubtMore National Income & GDP Questions
View all ›- Q1.Gross National Product (GNP) minus depreciation is equal to:
- Q2.Net National Product at factor cost is called:
- Q3.GDP evaluated at a set of constant (base-year) prices is called:
- Q4.Which sector contributes the most to India's national income (GDP/GVA)?
- Q5.What does the acronym GSDP stand for in the context of Indian economic indicators?
More General Knowledge Questions
- Q1.The techniques of Rasa and Bhava used in Indian classical dance trace their origin to which ancient text?Indian Dance Forms
- Q2.Lavani, Powada, Koli, Waghya Murali and Dhangari Gaja are folk dances of which state?Indian Dance Forms
- Q3.The one-act play associated with the Sattriya tradition of Assam is called:Indian Dance Forms
- Q4.Which dance form of Goa is known as the 'Warrior Dance'?Indian Dance Forms
- Q5.Manipuri dance is based on the Rasleela themes of:Indian Dance Forms
National Income & GDP — Preparation
This question tests your understanding of National Income & GDP, a key topic in the General Knowledge section. The detailed solution above uses a step-by-step approach to show the reasoning, and where available, a shortcut that helps you solve similar questions in under 90 seconds during the actual exam.
This topic covers national income and how it is measured: GDP, GNP, NDP and NNP, measurement at market price and at factor cost, the production, income and expenditure methods, per capita income, base years, and the sectors of the economy (primary, secondary and tertiary). Exam questions test the differences between the measures (GNP = GDP + net factor income from abroad, and NDP = GDP - depreciation), which body estimates national income in India (the National Statistical Office), and which sector contributes the most to India's GDP (the services sector). Dadabhai Naoroji made one of the first estimates of India's national income. Practise the national income and GDP questions below, written in the style of the general awareness sections of exams such as SSC, banking, railways, CUET GAT, MAH CET and CLAT. Each question comes with a detailed explanation that adds related facts, so every question helps you revise more than one point.