GDP deflator equals _____________. • The GDP deflator is the ratio of
Right Answer is: A
• The GDP deflator is the ratio of the value of goods and services produced in an economy in a particular year at current prices to value of goods and services produced in an economy in that particular year at constant prices. Hence it is a measure of inflation.
• GDP deflator = [(GDP at current prices)/(GDP at constant prices)] × 100
• This ratio helps in measuring the impact of inflation on the increase in gross domestic product.
• it is seen as a more comprehensive measure of inflation than the wholesale or consumer price indices as it covers the entire range of goods and services produced in the economy rather than limited coverage like in CPI or WPI.