gdp deflator

• Average level of prices is called the price level
• One measure of general price level is the GDP deflator, is an average of current-year prices expressed as a percentage of the base year price
• Nominal GDP = real GDP at constant prices x 100 GDP deflator
• When nominal GDP increase either the economy produced more goods and services and or paid higher prices, producing more contributes to an improvement in our standard of living
• Real GDP measures the growth of output, expansion of real GDP is economic growth