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
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    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 >>
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