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.

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RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. What are some alternatives to real GDP?

    Learn about economic measures used instead of real GDP and the limitations of real GDP. Find out in which situations nominal ... Read Answer >>
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    Learn what price deflation is, how inflation rates can be calculated using the consumer price index and what some causes ... Read Answer >>
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