What is GDP deflator? How is it calculated
Answers
Answer:
The GDP deflator is calculated by dividing nominal GDP by real GDP and multiplying by 100. GDP Deflator Equation: The GDP deflator measures price inflation in an economy. It is calculated by dividing nominal GDP by real GDP and multiplying by 100.
Answer:
The GDP deflator, also called implicit price deflator, is a measure of inflation. It is the ratio of the value of goods and services an economy produces in a particular year at current prices to that of prices that prevailed during the base year
Explanation:
The GDP deflator, also called implicit price deflator, is a measure of inflation. It is the ratio of the value of goods and services an economy produces in a particular year at current prices to that of prices that prevailed during the base year.
This ratio helps show the extent to which the increase in gross domestic product has happened on account of higher prices rather than increase in output.
Since the deflator covers the entire range of goods and services produced in the economy — as against the limited commodity baskets for the wholesale or consumer price indices — it is seen as a more comprehensive measure of inflation.