Gross National Product (GNP) Deflator

DEFINITION of 'Gross National Product (GNP) Deflator'

An economic metric that accounts for the effects of inflation in the current year's gross national product by converting its output to a level relative to a base period. The GNP deflator is calculated with the following formula:

Gross National Product (GNP) Deflator

BREAKING DOWN 'Gross National Product (GNP) Deflator'

The GNP deflator provides an alternative to the Consumer Price Index (CPI). The CPI is based upon a basket of goods and services while the GNP deflator incorporates all of the final goods produced by an economy. This allows the GNP to more accurately capture the effects of inflation since it's not limited to a smaller subset of goods.

RELATED TERMS
  1. Gross National Product - GNP

    Gross national product (GNP) is an economic statistic that includes ...
  2. Net National Product - NNP

    The monetary value of finished goods and services produced by ...
  3. Net Foreign Factor Income (NFFI)

    The difference between a nation’s gross national product (GNP) ...
  4. Okun's Law

    The relationship between an economy's unemployment rate and its ...
  5. Economic Growth

    An increase in the capacity of an economy to produce goods and ...
  6. GDP Price Deflator

    An economic metric that accounts for inflation by converting ...
Related Articles
  1. Economics

    What's the GNP?

    Gross national product (GNP) is one of many metrics economists use to measure a country’s economic output. For any one year, GNP equals the market value of all the goods and services produced ...
  2. Term

    The Functional Difference Between GDP and GNP

    Both gross domestic product and gross national product try to measure the market value of all goods and services an economy produces.
  3. Professionals

    Introduction

    CFA Level 1 - Section 4: Introduction to Macroeconomics
  4. Fundamental Analysis

    Deadly Flaws In Major Market Indicators

    These indicators give investors and experts some data to work with, but they're far from perfect measures.
  5. 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 ...
  6. 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. ...
  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. Savings

    Why Is Deflation Bad For The Economy?

    While some inflation is good for economic growth, when prices begin to fall after an economic downturn, deflation may set in causing an even deeper crisis.
  9. Professionals

    Inflation, Deflation and Stagflation

    Inflation, Deflation and Stagflation
  10. Fundamental Analysis

    Protect Your Portfolio Against Inflation And Deflation

    Inflation and deflation are opposite sides of the same coin. When both are threatening, here's what to do to keep your portfolio safe.
RELATED FAQS
  1. What is the formula for calculating gross national product (GDP)?

    Find out how to calculate a country's gross national product (GNP), which is a method of accounting for the total income ... Read Answer >>
  2. What insights are economists trying to capture with GNP?

    Learn how, despite its disfavor as a primary economic indicator, GNP provides special insight into the value of production ... Read Answer >>
  3. What is the functional difference between GDP and GNP?

    Find out the difference between GDP and GNP, and how each brings a different perspective to the meaning of economic success. Read Answer >>
  4. Is GNP a valuable metric in a globalized economy?

    Learn about the value of GNP in a globalized economy and find out what information GNP can provide to policymakers and business ... Read Answer >>
  5. When do economists use GNP?

    Learn about the ways economists use GNP. Find out how the Bureau of Economic Analysis monitors U.S. economic performance ... Read Answer >>
  6. What does GNP say about the balance of trade?

    Learn about the interaction of GNP and the balance of trade. Find out how GNP is structured and the role that the balance ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. 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 ...
  3. Keynesian Economics

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

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

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

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