Macroeconomics
Hao Rong Wang
GDP deator vs CPI
Winter 2016
Ination is where your hard earned dollars are able to buy less and less items than before. For
example candy bars are something we as an aggregate consume on a regular basis. The prices have
doubled over the last ten years. In the early 2000s a candy bar could be bought for twenty *ve to thirty
*ve cents, now they are closer to sixty *ve cents. In macroeconomics, the GDP deator and CPI are both
used to measure the rate of ination. These two tools are used to by governments, investment firm,
and any persons that wish to apply economics into their lives must account for.
GDP deator is calculated through nominal GPD divided by real GDP then multiplied by 100. Real
