Question

On the basis of the following hypothetical data, calculate the percentage change in Real Gross Domestic Product (GDP) in the year 2022 – 23, using 2020 – 21 as the base year.

Year	Nominal GDP	Nominal GDP (Adjusted to Base Year Price)
2020–21	3,000	5,000
2022–23	4,000	6,000

Hint:

To calculate the percentage change in Real GDP, always use the formula for percentage change between the Real GDP of two years, adjusting for inflation using the base year prices.

Answer 1

The percentage change in Real GDP is calculated using the following steps: 1. Real GDP for 2022-23 (Adjusted to Base Year Price):
The Real GDP is adjusted for inflation using the base year's prices. For 2022-23, the Real GDP is ₹ 6,000 crore (already adjusted).
2. Real GDP for 2020-21 (Adjusted to Base Year Price):
Similarly, for 2020-21, the Real GDP is ₹ 5,000 crore.
3. Formula for Percentage Change in Real GDP:
\[ \text{Percentage Change in Real GDP} = \left( \frac{\text{Real GDP in 2022-23} - \text{Real GDP in 2020-21}}{\text{Real GDP in 2020-21}} \right) \times 100 \] 4. Calculation: \[ \text{Percentage Change in Real GDP} = \left( \frac{6,000 - 5,000}{5,000} \right) \times 100 = \left( \frac{1,000}{5,000} \right) \times 100 = 20% \] Therefore, the percentage change in Real GDP in 2022-23, using 2020-21 as the base year, is 20%. %Quicktip