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The value of Nominal GDP is USD 1100 and the value of Real GDP is USD 1000. Find the value of GDP deflator:

Solution

Correct Option: 2
  1. Nominal GDP -> current prices is USD 1100
  2. Real GDP -> base year prices is USD 1000
  3. GDP deflator = Nominal GDP / Real GDP -> calculate ratio
  4. GDP deflator = 1100 / 1000 = 1.1

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