Business

Economics 101: What Is the GDP Price Deflator and How Is the GDP Price Deflator Calculated?

Written by the MasterClass staff

Last updated: Sep 29, 2021 • 4 min read

When economists track the change in a country’s overall economic health, they typically examine a country’s gross domestic product, or GDP—the aggregate value of that country’s goods and services within a fixed period of time. But simply comparing the gross domestic product from two different periods can be misleading because such a comparison does not account for changes in the rate of inflation. Economists have a tool to address this: the GDP price deflator.