The value of Nominal Income when Real Income is Rs. 5000 and GDP deflator is 125 percent will
be :
(
This question was previously asked in
Shift 09/06/2023 3:30 PM - 6:30 PM
A
Rs. 12,500
B
Rs. 6,250
C
Rs. 8,000
D
Rs. 7,500
Correct Answer
Rs. 6,250
Detailed Explanation
To find the nominal income, you should use the following formula:
Nominal Income = (Real Income * GDP Deflator) / 100
Given:
Real Income = Rs. 5000
GDP Deflator = 125 percent = 125
Nominal Income = (5000 * 125) / 100 = 6250
So, the correct answer is (2) Rs. 6,250.
The reason is that you multiply the real income by the GDP deflator (expressed as a percentage) and then divide by 100 to obtain the nominal income. In this case, it's (5000 * 125) / 100 = 6250.
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