Question 58
HardOriginal questionAn economy produces only two goods. Year 1 is the base year.
| Good | Price, year 1 (₹) | Quantity, year 1 | Price, year 2 (₹) | Quantity, year 2 |
|---|---|---|---|---|
| Apples | 10 | 100 | 12 | 120 |
| Bread | 20 | 50 | 25 | 60 |
What is the GDP deflator in year 2?
Show the answer and explanation
CorrectNot quiteAnswer C
Correct answer: C
Explanation
Nominal GDP year 2 = 2,940; real GDP year 2 = 2,400.
Deflator = 2,940 ÷ 2,400 × 100 = 122.5.
Worth noting
147 divides year 2's nominal GDP by year 1's GDP, which mixes the rise in prices with the rise in output.
- Concept
- Deflator from two goods
- Typical timeTypical
- 100 s
- Your timeYours
- —
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