Deflator of the GDP

The deflator of the GDP is one of the economic indicators making it possible to measure the Inflation. Another indicator, more running, is the Consumer price index.

Definition

In manner general, a deflator is an instrument making it possible to correct an economic size of the effects of the Inflation.

It is a question here of correcting the Gross domestic product (GDP) of the effects of inflation.

Concretely, the deflator measures the current price of all the goods and services produced in an economy, compared to one year under review. One can calculate it so that:

\ operatorname {Deflator \ of \ GDP} = \ frac {\ operatorname {GDP \ nominal}} {\ operatorname {GDP \ real}} {*100}

where:

  • nominal GDP = value of the goods and services measured at current prices.
  • real GDP = value of the goods and services measured at constant price (by taking the prices of one year under review)

The deflator holds account only prices of the goods and services produced on the national territory by taking account of a basket of goods and services evolutionary.

In manner general, and according to the volume and of the trend of the prices of the imports, the deflator of the GDP will mésestimera the inflation of the prices the consumer, but the difference is usually weak.

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