How GDP deflator calculated

Question

ScanSolve AI Tutor · Accepted Answer

The GDP deflator is a measure of the average change in prices of all new, domestically produced, final goods and services in an economy. It is calculated as the ratio of nominal GDP to real GDP, multiplied by 100.

Define Nominal GDP and Real GDP.
- Nominal GDP is the total value of goods and services produced in a country at current market prices.
- Real GDP is the total value of goods and services produced in a country, adjusted for inflation, using prices from a base year.
State the formula for the GDP deflator.
$\text{GDP Deflator} = \frac{\text{Nominal GDP}}{\text{Real GDP}} \times 100$
The formula is:
$\boxed{\mathbf{\text{GDP Deflator} = \frac{\text{Nominal GDP}}{\text{Real GDP}} \times 100}}$

How GDP deflator calculated

Step-by-step solution

Define Nominal GDP and Real GDP.

State the formula for the GDP deflator.

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