GNP deflator

GNP deflator

a PRICE INDEX that is used as a means of adjusting money GROSS NATIONAL PRODUCT values to obtain real GNP values (see REAL VALUES). Real GNP is important because this represents output of physical goods and services, not their money values. An economy may appear to produce more goods and services (ECONOMIC GROWTH) because money GNP has increased, but this may simply reflect price increases (INFLATION) without any increase in physical output. The GNP deflator is thus designed to remove the influence of price changes and record only real changes.