GDP Price Deflator

Loading the player...

What is the 'GDP Price Deflator'

The GDP price deflator is an economic metric that accounts for inflation by converting output measured at current prices into constant-dollar GDP. The GDP deflator shows how much a change in the base year's GDP relies upon changes in the price level. Also known as the "GDP implicit price deflator."

BREAKING DOWN 'GDP Price Deflator'

Because it isn't based on a fixed basket of goods and services, the GDP deflator has an advantage over the Consumer Price Index. Changes in consumption patterns or the introduction of new goods and services are automatically reflected in the deflator.

RELATED TERMS
  1. Deflation

    A general decline in prices, often caused by a reduction in the ...
  2. Nominal GDP

    A gross domestic product (GDP) figure that has not been adjusted ...
  3. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced ...
  4. Real Gross Domestic Product (GDP)

    An inflation-adjusted measure that reflects the value of all ...
  5. Gross National Product (GNP) Deflator

    An economic metric that accounts for the effects of inflation ...
  6. Value Deflation

    When companies cut their costs without increasing prices for ...
Related Articles
  1. Professionals

    Nominal vs. Real GDP, and the GDP Deflator

    CFA Level 1 - Nominal vs. Real GDP, and the GDP Deflator
  2. Economics

    Calculating the GDP Price Deflator

    The GDP price deflator adjusts gross domestic product by removing the effect of rising prices. It shows how much an economy’s GDP is really growing.
  3. Markets

    Can Deflation Be Good?

    General economic theory consensus rules that deflation is bad for the economy. But the Swiss economy, which is growing despite a drop in prices for the last four years, is proving otherwise. ...
  4. Economics

    What is Deflation?

    Deflation is an economic term used to describe a period of declining prices for goods and services. Decreases in the money supply, government spending, consumer demand and business investment ...
  5. Economics

    How The GDP Of The US Is Calculated

    The US GDP may not be a perfect economic measure, but the ability to compare it to prior periods and other countries makes it the most applicable.
  6. Economics

    Explaining The World With Macroeconomic Analysis

    Macroeconomists try to forecast economic conditions to help consumers, firms and governments make better decisions.
  7. Mutual Funds & ETFs

    The Upside Of Deflation

    Deflation has continued to pop up throughout economic history - but is that such a bad thing?
  8. Economics

    Macroeconomics: Economic Performance and Growth

    By Stephen Simpson Income is one of the most significant factors in measuring economic performance, and gross domestic product (GDP) is the most commonly used measure of a country's economic ...
  9. Economics

    How To Calculate The GDP Of A Country

    We explain how to calculate the GDP of a country using two different approaches.
  10. Retirement

    Economic Indicators: Gross Domestic Product (GDP)

    By Ryan Barnes Release Date: Advance release: four weeks after quarter ends;Final release: three months after quarter ends Release Time: 8:30am ...
RELATED FAQS
  1. When do economists use real GDP instead of GDP?

    Learn about the purposes for which economists rely on real GDP. Find out how real GDP is calculated and how it is important ... Read Answer >>
  2. What is the benefit of using real GDP over GDP?

    Find out why real GDP allows economists to measure changes in the economic growth or decline of a country more accurately ... Read Answer >>
  3. Is the nominal value of GDP a sufficient metric for measuring the economy's health?

    Find out whether the nominal value of gross domestic product is sufficient for measuring the health of an economy and how ... Read Answer >>
  4. Is real GDP a better index of economic performance than GDP?

    Learn why real GDP is a better index for expressing the output of an economy, as it takes into account the factors that distort ... Read Answer >>
  5. What does deflation mean to investors?

    Before we delve right into the topic of deflation, it should be noted that the causes and effects of deflation are complex ... Read Answer >>
  6. What does it signify if there is a large discrepancy between a nation's real and ...

    Discover the differences between real GDP and nominal GDP and what it means when there is a large discrepancy between the ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center