The GDP price deflator measures the changes in prices for all of the goods and services produced in an economy. In most systems of national accounts the GDP deflator measures the ratio of nominal (or current-price) GDP to the real (or chain volume) measure of GDP. This formula shows changes in nominal GDP that cannot be attributed to changes in real GDP. Using the GDP price deflator helps economists compare the levels of … Nominal GDP captures the valuation of all goods and services at current prices, while real GDP is the valuation of the same at constant prices without the effect of inflation. 2013: 10,120 / 9,412 = 107.5 5. You are required to calculate real GDP per capita. This GDP deflator formula calculator measures the price level calculated as the ratio of nominal GDP to real GDP times 100. = ($450,000,000,000 / (1 + 25%)/100,000,000 2012: 9,740 / 8,355 = 116.6 4. Therefore, the calculation will be as follows, 1. The formula for GDP deflator is very simple and it can be derived by dividing the nominal GDP by the real GDP and then the result is multiplied by 100. The GDP deflator can also be used to calculate the inflation levels with the below formula: Inflation = (GDP of Current Year – GDP of Previous Year) / GDP of Previous Year Extending the above example, we have calculated the inflation for 2011 and 2012. The formula used to calculate the deflator is: It is sometimes also referred to as the GDP Price Deflator or the Implicit Price Deflator. To calculate the GDP price deflator formula, we need to know the nominal GDP and the real GDP. After you have determined the values of both Nominal GDP and Real GDP, use the two values in the GDP deflator formula, which is “Nominal GDP divided by Real GDP multiplied by 100.” 4 The resulting value will be the GDP deflator value. It can be calculated as the ratio of nominal GDP to real GDP times 100 ([nominal GDP/real GDP]*100). 2015: 12,582 / 11,473 = 109.7 Notice that in 2013 and 2014, the GDP price deflator de… Then, every year we calculate the GDP deflator using the formula: GDP price deflator = Nominal GDP / Real GDP x 100 Therefore: 1. In the following example, 2010 is the base year. In other words, it helps you to find out the level of prices of all domestically produced final goods and services, also taking into account the exports of a country. 2011: 8,350 / 7,500 = 111.3 3. Country MNS has a nominal GDP of $450 billion and the deflator rate is 25%. The population of the country MNS is 100 million. Solution We are given all the desired inputs to calculate Real GDP per capita. 2010: 7,000 / 7,000 = 100.0 2. 2014: 11,111 / 10,852 = 102.4 6.
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