{"id":85516,"date":"2025-06-01T03:19:29","date_gmt":"2025-06-01T03:19:29","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=85516"},"modified":"2025-06-01T03:19:29","modified_gmt":"2025-06-01T03:19:29","slug":"which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/","title":{"rendered":"Which of the following statements is\/are correct?\n  1. GDP deflator ca"},"content":{"rendered":"<p>Which of the following statements is\/are correct?<\/p>\n<ul>\n<li>1. GDP deflator captures the average price of an unchanging basket of commodities that constitutes the GDP of the country.<\/li>\n<li>2. GDP deflator can be used to measure the real GDP of the economy but not the inflation rate.<\/li>\n<\/ul>\n<p>Select the correct answer using the code given below.<\/p>\n<p>[amp_mcq option1=&#8221;1 only&#8221; option2=&#8221;2 only&#8221; option3=&#8221;Both 1 and 2&#8243; option4=&#8221;Neither 1 nor 2&#8243; correct=&#8221;option4&#8243;]<\/p>\n<div class=\"psc-box-pyq-exam-year-detail\">\n<div class=\"pyq-exam\">\n<div class=\"psc-heading\">This question was previously asked in<\/div>\n<div class=\"psc-title line-ellipsis\">UPSC CDS-1 &#8211; 2024<\/div>\n<\/div>\n<div class=\"pyq-exam-psc-buttons\"><a href=\"\/pyq\/pyq-upsc-cds-1-2024.pdf\" target=\"_blank\" class=\"psc-pdf-button\" rel=\"noopener\">Download PDF<\/a><a href=\"\/pyq-upsc-cds-1-2024\" target=\"_blank\" class=\"psc-attempt-button\" rel=\"noopener\">Attempt Online<\/a><\/div>\n<\/div>\n<section id=\"pyq-correct-answer\">\nD) Neither 1 nor 2<br \/>\n<\/section>\n<section id=\"pyq-key-points\">\n&#8211; Statement 1 is incorrect. The GDP deflator is a price index that reflects the prices of all domestically produced goods and services in GDP. It does *not* use an unchanging basket of commodities; the basket of goods and services included in the GDP changes year to year based on production patterns. This contrasts with indices like the Consumer Price Index (CPI), which uses a fixed basket.<br \/>\n&#8211; Statement 2 is incorrect. The GDP deflator is indeed used to calculate Real GDP from Nominal GDP (Real GDP = Nominal GDP \/ GDP Deflator * 100). However, it is also commonly used as a measure of the economy&#8217;s overall inflation rate. Inflation rate between two periods can be calculated from the percentage change in the GDP deflator.<br \/>\n<\/section>\n<section id=\"pyq-additional-information\">\n&#8211; The GDP deflator is a Paasche index because it uses the current year&#8217;s quantities of goods and services as weights, reflecting changes in the composition of output. The CPI is a Laspeyres index as it uses a base year&#8217;s quantities as weights.<br \/>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>Which of the following statements is\/are correct? 1. GDP deflator captures the average price of an unchanging basket of commodities that constitutes the GDP of the country. 2. GDP deflator can be used to measure the real GDP of the economy but not the inflation rate. Select the correct answer using the code given below. &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"Which of the following statements is\/are correct?\n  1. GDP deflator ca\" class=\"read-more button\" href=\"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/#more-85516\">Detailed Solution<span class=\"screen-reader-text\">Which of the following statements is\/are correct?<br \/>\n  1. GDP deflator ca<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1087],"tags":[1103,1120,1174],"class_list":["post-85516","post","type-post","status-publish","format-standard","hentry","category-upsc-cds-1","tag-1103","tag-economic-development","tag-national-income-gross-domestic-product","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Which of the following statements is\/are correct?  1. GDP deflator ca<\/title>\n<meta name=\"description\" content=\"D) Neither 1 nor 2 - Statement 1 is incorrect. The GDP deflator is a price index that reflects the prices of all domestically produced goods and services in GDP. It does *not* use an unchanging basket of commodities; the basket of goods and services included in the GDP changes year to year based on production patterns. This contrasts with indices like the Consumer Price Index (CPI), which uses a fixed basket. - Statement 2 is incorrect. The GDP deflator is indeed used to calculate Real GDP from Nominal GDP (Real GDP = Nominal GDP \/ GDP Deflator * 100). However, it is also commonly used as a measure of the economy&#039;s overall inflation rate. Inflation rate between two periods can be calculated from the percentage change in the GDP deflator.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Which of the following statements is\/are correct?  1. GDP deflator ca\" \/>\n<meta property=\"og:description\" content=\"D) Neither 1 nor 2 - Statement 1 is incorrect. The GDP deflator is a price index that reflects the prices of all domestically produced goods and services in GDP. It does *not* use an unchanging basket of commodities; the basket of goods and services included in the GDP changes year to year based on production patterns. This contrasts with indices like the Consumer Price Index (CPI), which uses a fixed basket. - Statement 2 is incorrect. The GDP deflator is indeed used to calculate Real GDP from Nominal GDP (Real GDP = Nominal GDP \/ GDP Deflator * 100). However, it is also commonly used as a measure of the economy&#039;s overall inflation rate. Inflation rate between two periods can be calculated from the percentage change in the GDP deflator.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T03:19:29+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Which of the following statements is\/are correct?  1. GDP deflator ca","description":"D) Neither 1 nor 2 - Statement 1 is incorrect. The GDP deflator is a price index that reflects the prices of all domestically produced goods and services in GDP. It does *not* use an unchanging basket of commodities; the basket of goods and services included in the GDP changes year to year based on production patterns. This contrasts with indices like the Consumer Price Index (CPI), which uses a fixed basket. - Statement 2 is incorrect. The GDP deflator is indeed used to calculate Real GDP from Nominal GDP (Real GDP = Nominal GDP \/ GDP Deflator * 100). However, it is also commonly used as a measure of the economy's overall inflation rate. Inflation rate between two periods can be calculated from the percentage change in the GDP deflator.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/","og_locale":"en_US","og_type":"article","og_title":"Which of the following statements is\/are correct?  1. GDP deflator ca","og_description":"D) Neither 1 nor 2 - Statement 1 is incorrect. The GDP deflator is a price index that reflects the prices of all domestically produced goods and services in GDP. It does *not* use an unchanging basket of commodities; the basket of goods and services included in the GDP changes year to year based on production patterns. This contrasts with indices like the Consumer Price Index (CPI), which uses a fixed basket. - Statement 2 is incorrect. The GDP deflator is indeed used to calculate Real GDP from Nominal GDP (Real GDP = Nominal GDP \/ GDP Deflator * 100). However, it is also commonly used as a measure of the economy's overall inflation rate. Inflation rate between two periods can be calculated from the percentage change in the GDP deflator.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T03:19:29+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/","url":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/","name":"Which of the following statements is\/are correct? 1. GDP deflator ca","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T03:19:29+00:00","dateModified":"2025-06-01T03:19:29+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"D) Neither 1 nor 2 - Statement 1 is incorrect. The GDP deflator is a price index that reflects the prices of all domestically produced goods and services in GDP. It does *not* use an unchanging basket of commodities; the basket of goods and services included in the GDP changes year to year based on production patterns. This contrasts with indices like the Consumer Price Index (CPI), which uses a fixed basket. - Statement 2 is incorrect. The GDP deflator is indeed used to calculate Real GDP from Nominal GDP (Real GDP = Nominal GDP \/ GDP Deflator * 100). However, it is also commonly used as a measure of the economy's overall inflation rate. Inflation rate between two periods can be calculated from the percentage change in the GDP deflator.","breadcrumb":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-statements-is-are-correct-1-gdp-deflator-ca\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/exam.pscnotes.com\/mcq\/"},{"@type":"ListItem","position":2,"name":"UPSC CDS-1","item":"https:\/\/exam.pscnotes.com\/mcq\/category\/upsc-cds-1\/"},{"@type":"ListItem","position":3,"name":"Which of the following statements is\/are correct? 1. 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