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what is GDP deflator?how is it …

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what is GDP deflator?how is it calculated?
  • 1 answers

Yogita Ingle 4 years, 11 months ago

GDP deflator, also known as the implicit price deflator, is used to measure inflation. It is used to determine the levels of prices of the new, domestically produced final goods and services in a country in a year.

GDP deflector shows the changes in the average price levels in the economy, and therefore, it is used in conjunction with the Consumer Price Index (CPI) for measuring inflation.

GDP deflator formula can be represented as

GDP deflator = Nominal GDP / Real GDP * 100

Like other price indices such as CPI, GDP deflector is not formed on a fixed basket of goods and services. The basket is altered every year depending on people’s investment and consumption patterns for that year.

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