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What Is The Difference Between GDP Deflator and CPI

The GDP deflator reflects prices of all domestically produced goods and services, while the CPI uses a fixed basket of consumer goods and services, including imports. The GDP deflator compares current prices to a base year, but the CPI includes foreign goods. Real GDP is nominal GDP adjusted for inflation using a price index, measuring an economy's size in constant purchasing power terms, while nominal GDP is unadjusted for inflation.

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161 views

What Is The Difference Between GDP Deflator and CPI

The GDP deflator reflects prices of all domestically produced goods and services, while the CPI uses a fixed basket of consumer goods and services, including imports. The GDP deflator compares current prices to a base year, but the CPI includes foreign goods. Real GDP is nominal GDP adjusted for inflation using a price index, measuring an economy's size in constant purchasing power terms, while nominal GDP is unadjusted for inflation.

Uploaded by

Kevin Jang
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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What is the difference between GDP deflator and CPI?

Three differences: GDP Deflator reflects prices of all goods and services produced within the country, whereas CPI reflects the prices of a representative basket of goods and services purchased by the consumers. CPI uses a fixed basket of goods and services whereas the GDP deflator compared the price of currently produced goods relative to price of goods in the base year. GDP Deflator includes only domestic goods and not anything that is imported. This is different because the CPI includes anything bought by consumers including foreign goods.

What is the difference between RGDP and NGDP?


Real GDP = Nominal GDP / Price Index
Nominal GDP is the figure that has not been adjusted for inflation (=current dollar GDP=chained dollar GDP) Real GDP is a macroeconomics measure of the size of an economy adjusted for price changes and inflation. It can be thought of in terms of purchasing power. Real GDP per Capita reflects GDP purchasing power of the average income individual in the economy.

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