The Gross Domestic Product (GDP) price deflator, also known as the GDP deflator or implicit price deflator for GDP, is a measure of the average change in prices of all new, domestically produced final goods and services in an economy. It is used to adjust the nominal GDP to obtain the real GDP, which reflects changes in output while holding the price level constant. The GDP price deflator is a broad indicator of inflation or deflation within an economy.

The formula for calculating the GDP price deflator is as follows:

\[ \text{GDP Price Deflator} = \left( \frac{\text{Nominal GDP}}{\text{Real GDP}} \right) \times 100 \]

The GDP price deflator is expressed as an index number, often with a base year set to 100. The index indicates the percentage change in the overall price level of goods and services produced in the economy.

Key points about the GDP price deflator:

1. **Nominal vs. Real GDP:** Nominal GDP is the total value of goods and services produced in an economy measured at current market prices, while real GDP adjusts for changes in price levels and provides a measure of actual output.

2. **Base Year:** The GDP price deflator is typically computed relative to a base year, which serves as a benchmark. The index shows how much prices have changed relative to the base year.

3. **Inflation and Deflation:** If the GDP price deflator increases over time, it indicates inflation, meaning that, on average, prices of goods and services have risen. Conversely, a decrease in the index suggests deflation.

4. **Comparison with Other Price Indices:** While the GDP price deflator reflects price changes for all goods and services produced domestically, other indices like the Consumer Price Index (CPI) and the Producer Price Index (PPI) focus on specific baskets of goods and services consumed by households or produced by industries, respectively.

5. **Comprehensive Measure:** The GDP price deflator provides a comprehensive measure of inflation or deflation since it covers the entire range of goods and services in the economy.

Economists and policymakers use the GDP price deflator to analyze trends in overall price levels, monitor inflationary or deflationary pressures, and make adjustments to economic indicators such as real GDP to understand changes in economic output after accounting for changes in prices.