The GDP deflator is a measure of the price level which is calculated as nominal GDP divided by real GDP and multiplied by 100.

Question

Quizplus · Accepted Answer

This is the correct formula for calculating the GDP deflator. Nominal GDP measures the current market value of all final goods and services produced in a country, while real GDP adjusts for inflation by using constant prices from a specific base year. Dividing nominal GDP by real GDP gives a ratio that can be multiplied by 100 to convert it to a percentage, representing the overall price level of the economy.

The GDP Deflator Is a Measure of the Price Level