economics medium Fill in the Blank

The GDP Deflator is a measure of the level of prices of all new, domestic goods and services in an economy, and it is calculated as the ratio of ___ GDP to Real GDP multiplied by 100.

  1. Production
  2. Consumer Price Index (CPI)
  3. Countercyclical
  4. Nominal

Answer: Nominal

The GDP Deflator reflects the price changes of all domestically produced goods and services, making it a broader and more comprehensive measure of inflation than the CPI or WPI. By dividing Nominal GDP (calculated at current year prices) by Real GDP (calculated at base year prices), it isolates the exact impact of inflation on economic growth.

Topic Macroeconomics - National Income
Exam Relevance UPSC Prelims, SSC CGL
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