Principles of Macroeconomics / Unit 3 MAC 0216 short lesson, about 20 seconds
The GDP Deflator
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The idea
The GDP deflator is a price index covering everything in GDP. It is nominal GDP divided by real GDP, and in the base year it equals one hundred.
In practice
In the base year real and nominal GDP are equal.
Where people slip
Some sources report the index around one rather than one hundred, so check which convention is in use before dividing.
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