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What does the GDP deflator measure?

easy Q13 of 15
Economic Awareness - Sectors of Indian Economy
What does the GDP deflator measure?
AThe ratio of Nominal GDP to Real GDP multiplied by 100
BThe inflation rate based on consumer goods only
CThe ratio of Real GDP to Nominal GDP
DThe difference between GDP and GNP
Step-by-Step Solution

  1. Step 1: Identify the concept

    The GDP deflator is an inflation measure derived from GDP data.

  2. Step 2: Apply the formula

    GDP deflator = (Nominal GDP / Real GDP) × 100, which reflects the price level changes in the economy.

  3. Final Answer:

    The ratio of Nominal GDP to Real GDP multiplied by 100 → Option A

  4. Quick Check:

    GDP deflator = (Nominal GDP ÷ Real GDP) × 100 ✅
Quick Trick: GDP deflator = Nominal ÷ Real × 100
Common Mistakes:
  • Confusing GDP deflator with CPI or using inverse ratio.
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