CA Foundation P4 · Chapter 5 · Question 6 of 15
Nominal GDP of a year is Rs. 6,600 crore and the GDP deflator for that year is 120 (base year = 100). Real GDP is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 5,500 crore
Explanation
Real GDP = Nominal GDP / GDP deflator x 100 = 6,600 / 120 x 100 = Rs. 5,500 crore. Multiplying instead of dividing gives 7,920. Real GDP is below nominal GDP because prices have risen since the base year.
More Determination of National Income MCQs
- Q8In a two-sector economy, C = 100 + 0.75Y and autonomous investment I = 200 (Rs. crore). Equilibrium national income is:
- Q9The 'paradox of thrift' suggests that:
- Q10In a three-sector economy (Rs. crore): C = 50 + 0.8Yd, where Yd = Y - T; lump-sum tax T = 100; investment I = 100; government expenditure…
- Q11In a simple Keynesian model with lump-sum taxes, if government expenditure and taxes are both increased by Rs. 100 crore, national income…
- Q12In an open economy, MPC = 0.8 and the marginal propensity to import = 0.05 (with no taxes). The open-economy multiplier is: