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... even if it can only ever be an approximate correction:
This also ties GDP closely to 'growth', because a lot of apparent growth will come from increased prices - and this has a worrying circularity about it, as a notion.

GDP deflator = [Actual GDP/"Real" GDP]x100

so:

GDP deflator inflation rate approximately equals
 % growth in Actual GDP minus % growth in "Real" GDP.

I put the "Real" in ironic quotes, because the number is constructed by supposing that prices had not changed but that the precise same quantities of goods had been sold anyway.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Oct 10th, 2007 at 06:46:40 PM EST
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