Q.Define GDP deflator.

The GDP deflator is a comprehensive price index equal to (Nominal GDP ÷ Real GDP) × 100, showing the average price change of all goods and services counted in GDP.

In the national-income topic of the Tamil Nadu HSC Commerce syllabus, the GDP deflator is defined as the ratio of nominal GDP (GDP measured at current market prices) to real GDP (GDP measured at constant/base-year prices), multiplied by 100:

GDP deflator = (Nominal GDP ÷ Real GDP) × 100

Key points:

• It is the broadest measure of the price level because it covers every good and service produced in the economy, not just a fixed basket like the CPI or WPI.
• It shows how much of the change in nominal GDP is due to a change in prices rather than in real output. …