GDP Deflator.

Another, widely used price index IS the GDP deflator, which we met earlier in this chapter. The GDP deflator is the price of all goods and services produced in the country (consumption, investment, government purchases, and net exports)- rather than of a single component (such as. consumption). This index also differs from the additional CPI because it is a variable-weight index that takes into account the shares of different goods. In addition, there are deflators for components of GDP, such as for investment goods, computers, personal consumption. and so forth, and these are. sometimes used to supplement the CPI. In recent years, the L.S. government has introduced chain-weighted price indexes that change the weights on each good each period to reflect changes in expenditure shares (see the discussion of chain weights in note 1 on page 440).

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