GDP Price Deflator

As an economist for a country, you are tasked with finding out the GDP deflator for last year: 2017. You need to look back at 2017 nominal GDP and real GDP to figure out what the deflator would be. This will help you determine how well or how badly the economy might be doing based on prices. You'll need to use an equation to figure out what the correct numbers are.

Let’s say the nominal GDP for this year was 740,000 and the real GDP was 460,000. You will divide those numbers, then multiply by 100: ({740,000/460,000}*100). Which will give you a deflator of 160.90. This means the price level has increased by 60.9% from the base year. GDP Deflator helps you determine how much inflation is occurring throughout the years when compared to a base year.