What is the function of the GDP deflator?

CA Foundation · Business Economics · MTP · May 2026
What is the function of the GDP deflator?
(A) A. It evaluates inflation by utilizing the present production basket.
(B) B. It shows real GDP growth based on current production.
(C) C. The GDP deflator is in real terms while the CPI is in nominal terms.
(D) D. None of the above

Suggested Answer and Working Notes:

Correct Answer: Option (A)

A. It evaluates inflation by utilizing the present production basket.

Topics: Determination of National Income

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