# How to Calculate GDP Deflator

In economics, a gross domestic product – or GDP – deflator is a factor that is used to compare today's market prices to the market prices from a previous year. Calculating is simple once you know how.

### Instructions

- Step 1:
**Choose a country or region to study**Choose a country or a region that you wish to study and learn more about its gross domestic product. - Step 2:
**Find the nominal GDP**Find the nominal GDP for your chosen region. The nominal GDP is the country's gross domestic product measured at today's market prices. - TIP: You can get the nominal GDP for most nations from the World Bank web site – worldbank.org.
- Step 3:
**Select a base year you wish to compare**Select a base year that you will use for comparison to the current gross domestic product. - Step 4:
**Get the real GDP for your base year**Get the real GDP measurement for your country. The real GDP is the gross domestic product of your country, measured in dollars from your base year. - TIP: If you have chosen a base year of 1995, for example, the real GDP will be the current gross domestic product of your region, multiplied by their 1995 prices.
- Step 5:
**Divide nominal GDP by real GDP, multiply by 100**Divide the nominal GDP by the real GDP. Multiply this total by 100 to find the GDP deflator. - TIP: Rearrange the values in the equation to find nominal GDP when you know the real GDP and the GDP deflator.
- Step 6:
**Interpret the GDP deflator**Interpret the GDP deflator. Think of it as the ratio of today's prices to those of your base year. A deflator of 200 means that the current year's GDP is twice that of the base year, signaling inflation. - FACT: Did you know? As of 2009, the U.S. has a per capita GDP of $46,900.

### You Will Need

- A country
- Nominal GDP
- A calculator
- A computer with internet access (optional)