ECONOMICS (CBSE/UGC NET)

ECONOMICS

INFLATION

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

For the country of Mordor the Nominal Gross Domestic product was $8, 000 B. After comparing the inflation rate to the year prior the GDP deflator was 125. What was the inflation rate?

A	15%
B	125%
C	25%
D	50%

Explanation:

Detailed explanation-1: -GDP Price Deflator = (Nominal GDP ÷ Real GDP) × 100 Changes in consumption patterns and the introduction of new goods and services will be automatically incorporated into this figure to ensure that the inflation rate more truly reflects how economic strength has changed over time.

Detailed explanation-2: -GDP Deflator = (Nominal GDP ÷ Real GDP) × 100 Where: Nominal GDP → The value of the goods and services produced within an economy produced before any adjustments for inflation. Real GDP → The value of the goods and services produced within an economy after adjusting for inflation.

Detailed explanation-3: -How to calculate inflation using GDP deflator. GDP deflator is a measure of price level in an economy and is measured as a ratio of nominal to real GDP. This means that GDP deflator is calculated as nominal GDP divided by real GDP multiplied by 100.

There is 1 question to complete.