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GDP deflator

  1. Sep 16, 2014 #1
    I would like to raise a question about GDP deflator. In my macroeconomics textbook, there is a statement like this: "GDP deflator gives the average price of output". I wonder why the deflator will give the average price as it only measure the ratio between nominal GDP and real GDP...
    Thanks for help!
     
  2. jcsd
  3. Oct 24, 2014 #2
    That's not the definition of deflator, the definition is the Prices_year_n*Quantities_year_(n-1)/(Prices_year_(n-1)*Quantities_year_(n-1) thus giving the ratio between prices of an year n and the prices of the year n-1.
     
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