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Which of the following statement about GDP deflator is incorrect?
It is compiled by Central statistics office (CSO)
Its base year for calculations is 2011
It is more comprehensive in terms of coverage of items than any other price measuring index
It does include prices of imported goods
..Fourth statement is incorrect i.e. GDP deflator does include prices of imported goods. GDP Deflator takes into account goods that are produced domestically. It does not bother with imported goods and it reflects the prices of all the commodities, services included. For example, an increase in the price of Toyota made in Japan and sold in the U.K. affects the CPI or RPI, because the Toyota is bought by consumers in the U.K., but it does not affect the GDP deflator
The GDP deflator is a measure of the price level of all domestically produced final goods and services in an economy. It is calculated by dividing nominal GDP by real GDP and then multiplying by 100. Nominal GDP is the market value of goods and services produced in an economy, unadjusted for inflation (It is the GDP measured at current prices). Real GDP is nominal GDP, adjusted for inflation to reflect changes in real output (It is the GDP measured at constant prices).
GDP Deflator = (Nominal GDP/ Real GDP) x 100
By: Vishal ProfileResourcesReport error
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