What is a GDP Deflator?
The GDP deflator is utilized as a measure of shifts in the prices of goods and services that are produced in a given country. It is understood that the GDP deflator can help provide a more accurate picture of the current status of the gross domestic product within the country. Because the GDP deflator is understood to be an example of an implicit price deflator for GDP, economists consider calculating this economic indicator as an essential component in ascertaining the current strength or weakness of the country’s economy. The formula for calculating the GDP deflator is relatively simple. Essentially, the calculation requires current information regarding the chain volume measure or real GDP, and the current price or nominal GDP. This figure is calculated by taking the nominal GDP, dividing it by a known deflator, and multiplying the result by one hundred. This final figure will represent the real current status of the gross domestic product, as it allows for the change or deflation o
