The national debt doubled in nominal terms during a time whe

The national debt doubled in nominal terms during a time when the GDP Deflator increased from 200 to 300. This implies that the natinal debt: is smaller in real terms, has more than doubled in real terms, has increased in real terms, but it has less than doubled?

Solution

GDP deflator = {(GDP in nominal value) / (GDP in real value)} × 100

Nominal value = Real value + Inflation

If GDP deflator increases nominal GDP would also increase. It happens due to rising inflation, since the real value fluctuates steadily.

Answer: The last option is correct. Since the debt is doubled in nominal term, it has increased in real term too but in less than double.