Question

If the Real GDP is Rs 520 and Nominal GDP is Rs 650, calculate the Price Index (base=100).

• A. 150
• B. 135
• C. 125
• D. 80

Answer 1

The correct option is C

125

Real GDP=Nominal GDP$\times \frac{100}{\text{Price Index}}$

Or, Price Index=$\frac{\text{Nominal GDP}}{\text{Real GDP}}\times 100$

=$\frac{650}{520}\times 100=125$

Price Index=125.