DMPQ- Write a short note on the GDP deflator.

The GDP deflator, also called implicit price deflator, is a measure of inflation. It is the ratio of the value of goods and services an economy produces in a particular year at current prices to that of prices that prevailed during the base year.

This ratio helps show the extent to which the increase in gross domestic product has happened on account of higher prices rather than increase in output.

Since the deflator covers the entire range of goods and services produced in the economy — as against the limited commodity baskets for the wholesale or consumer price indices — it is seen as a more comprehensive measure of inflation

GDP  price deflator measures the difference between real GDP and nominal GDP. Nominal GDP differs from real GDP as the former doesn’t include inflation, while the latter does.

As a result, nominal GDP will most often be higher than real GDP in an expanding economy.

The formula to find the GDP price deflator:

GDP price deflator = (nominal GDP ÷ real GDP) x 100

 

CGPCS Notes brings Prelims and Mains programs for CGPCS Prelims and CGPCS Mains Exam preparation. Various Programs initiated by CGPCS Notes are as follows:-

Android App for CGPSC Prelims and Mains

Access your orders at pscnotes.com inside App
Install Now on

Subscribe to CGPSC Notes

Never Miss any CGPSC important update!

error: Content is protected !!