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The value of the nominal GNP of an econo...

The value of the nominal GNP of an economy was Rs. 2500 crores in a particular year. The value of GNP of that country during the same year, evaluated at the prices of some base year, was Rs. 3000 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 ?

Text Solution

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`" GNP Deflator"=("Nominal GNP")/("Real GNP")xx100=(2500)/(3000)xx100=0.83`
GNP deflator of 0.83 or 83 % indicates that the price level has reduced by 17 % between the base year and the year under consideration.
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