ABOUT

GROSS DOMESTIC PRODUCT

GROSS DOMESTIC PRODUCT DEFLATOR
CONSUMER PRICE INDEX
GROSS DOMESTIC PRODUCT - GDP

the main indicator for measuring the national

economy
 
is defined as the value of all goods and services
produced in the economy less the value of those
goods or services used in their creation.

the market value of all goods and services

within the borders of a country over a given period of
time
GROSS DOMESTIC PRODUCT

Consumption (C) +
Investments (I) +
Government expenditure (G) +
(Exports – Imports)
 GDP DEFLATOR - (GENERAL PRICE INDEX)

In the economic literature it is considered that

the most well-known and comprehensive indicator
for the expression of price evolution is the Deflator
of Gross Domestic Product.
 GDP DEFLATOR
Price index that measures the variation of prices of
all newly created end-use goods and services in an
economy over a specified period of time.
It is calculated as a percentage ratio between
nominal GDP in the current prices period and GDP in
constant prices.
(GDP nominal/GDP real) x 100
The GDP deflator shows the evolution of the
average price of all goods and services included in GDP.
 THE CONSUMER PRICE INDEX
measures the overall evolution of the
prices of purchased goods and service
tariffs used by the population in the
current year compared to the previous
year (or another year chosen as the
reference period).
THE DIFFERENCES BETWEEN

GROSS DOMESTIC PRODUCT DEFLATOR (INDEX)

THE CONSUMER PRICE INDEX (CPI)

 The GDP Deflator includes a much larger group
of goods and services than the one used in CPI
calculation;

The CPI measures the evolution of the prices

of a given basket of goods, the same every year
(what which is not the case for the deflator);
 The GDP deflator is a price index that covers all
final goods and services products in the economy. It
includes not only the evolution of the prices of goods
and services consumed, but also of the prices of
capital goods or those exported and imported.
 it can be appreciated that the GDP deflator
highlights both the consumption behavior and the
saving and investment behavior, much more sensitive
to financial policies and budgetary allocations.
 The main purpose of determining the CPI
and the GDP Deflator is to measure inflation.

The inflation rate represents the general

increase of prices in a certain period (expressed as
a percentage).