Question

What is GDP deflator? What are the advantage and disadvantage of it over other

indices like CPI & WPI? Which is better index to truly reflect change in price level.​

Answer 1

Explanation:

Using the GDP price deflator helps economists compare the levels of real economic activity from one year to another. The GDP price deflator is a more comprehensive inflation measure than the CPI index because it isn't based on a fixed basket of goods.