Economics · National Income Accounting
Under the new GDP base year (2022-23), India adopted 'Double Deflation' for measuring real Gross Value Added. Which of the following BEST describes the key advantage of Double Deflation over Single Deflation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It replaces the benchmark-indicator method by using the Commodity Flow Method for all sectors.
- 2It applies a single composite deflator derived from the GDP deflator to both agriculture and manufacturing simultaneously.
- 3It separately deflates the value of output and the value of intermediate inputs using their respective price indices, yielding a more accurate real value added.✓
- 4It eliminates the need for a Producer Price Index by using WPI for both output and input deflation.
Correct answer
It separately deflates the value of output and the value of intermediate inputs using their respective price indices, yielding a more accurate real value added.
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