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    Question

    Which of the following statement best describe the role

    of a “deflator”?
    A Adjusting for changes in price level Correct Answer Incorrect Answer
    B Adjusting for change in commodities in a basket Correct Answer Incorrect Answer
    C Adjusting for changes in weightage of sectors Correct Answer Incorrect Answer
    D Adjusting for changes in accounting policies Correct Answer Incorrect Answer

    Solution

    A deflator is a value that allows data to be measured over time in terms of some base period, usually through a price index, in order to distinguish between changes in the money value of a gross national product (GNP) that come from a change in prices, and changes from a change in physical output. The GDP deflator , also called implicit price deflator , is a measure of inflation. It is the ratio of the value of goods and services an economy produces in a particular year at current prices to that of prices that prevailed during the base year.

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