The GDP deflator is
A) an index that utilizes a consumer's market basket of goods in calculating the inflation rate.
B) the most general indicator of inflation since it measures changes in the prices of all goods and services in the economy.
C) an index used to calculate inflation at the wholesale level.
D) the least used index because it is so costly to calculate.

Question

Quizplus · Accepted Answer

The GDP deflator is a broad-based indicator of inflation that measures the price changes of all goods and services produced in an economy. It is computed by dividing nominal GDP by real GDP and multiplying by 100. This makes it a more comprehensive measure of inflation than indexes, such as the Consumer Price Index (CPI), which only measures changes in the prices of a fixed basket of consumer goods and services.

The GDP Deflator Is