# how to calculate gdp deflator

average) price level over a period of time (usually a year), which corresponds to the percent change in the GDP deflator from one year to the next. The resulted value shows how the price level of the produced hamburgers and ice-creams has changed compared to the 2016 base year.Use our 28/36 Rule Calculator to set a benchmark as a lender to determine how much credit you can offer to an individual or household for a credit application.With our results, we can find out the inflation rate associating all produced goods in La-la-land. Note that in the base year, real and nominal GDP are always the same because we use the same prices when calculating them. GDP deflator is calculated by dividing nominal GDP by real GDP and multiplying by 100. For the year 2016, the GDP deflator is7 160.9 ([740,000/460,000]*100). It’s not necessary that inflation is occurring but one can experience deflation after a period of inflation if prices are higher compared to the base year.The GDP deflator can also be used to calculate the inflation levels with the below formula:It can be noticed that the deflator is decreasing in 2013 and 2014 compared to the base year of 2010. The real GDP includes the same economic activity but … Calculation Measurement in national accounts. To do this, we divide nominal GDP by real GDP and multiply the result with 100. Calculating is simple once you know how. Formula to calculate GDP deflator. Let us look at some of the critical differences between GDP Deflator vs CPIIB Excel Templates, Accounting, Valuation, Financial Modeling, Video TutorialsThe GDP deflator is a measure of the change in the annual domestic production due to change in price rates in the economy and hence it is a measure of the change in nominal GDP and real GDP during a particular year calculated by dividing the Nominal GDP with the real GDP and multiplying the resultant with 100.Similarly, we have calculated the GDP Deflator for the year 2011 to 2015.The below graph shows the GDP Deflator of the Indian Economy:In the below template, we have calculated this Deflator for the year 2010 using the above-mentioned formula of GDP Deflator.Extending the above example, we have calculated the inflation for 2011 and 2012.It’s a measure of price inflation/deflation with respect to the specific base year and is not based on a fixed basket of goods or services but is allowed to be modified on a yearly basis depending on consumption and investment patterns.This has been a guide to what is GDP Deflator. GDP Deflator = (\$1,625 / \$800) * 100; GDP Deflator = 203.13; Therefore, the GDP deflator for the year 2016, 2017 and 2018 stood at 100, 150 and 203.13 respectively.

The formula used to calculate the deflator is: = × The nominal GDP of a given year is computed using that year's prices, while the real GDP of that year is computed using the base year's prices. The formula used to calculate the deflator is: However, that same economy might be exhibiting little-to-no growth, but with prices rising, the total output figures would appear higher than what was really being produced. To do that we need to utilize the inflation rate formula with the GDP deflators in different years. The theory behind this approach is that the GDP deflator reflects up to date expenditure patterns. The GDP deflator for the base year will always be 100 because nominal and real GDP have to be equal.

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