AP MacroeconomicsMeasuring the Economy
GDP Deflator
The GDP deflator is a measure of the level of 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, and shows how much prices have changed since the base year. It is a broad measure of inflation that includes all goods and services in GDP, unlike the CPI which uses a fixed basket.
Formula / Example
GDP Deflator = (Nominal GDP / Real GDP) × 100