Deflaator

Deflaator is a term that can refer to several concepts, often related to reducing or counteracting inflation. In economics, a deflaator, or deflator, is a measure used to adjust nominal economic data into real economic data. The most common example is the GDP deflator, which is the ratio of nominal GDP to real GDP. This index measures the price level of all newly produced final goods and services in an economy. By dividing nominal GDP by the GDP deflator, economists can arrive at real GDP, which reflects the actual volume of goods and services produced, free from the influence of price changes.

Beyond this specific economic index, "deflaator" can also be used more generally to describe any force or policy that aims to reduce prices or the overall price level. This might include actions taken by a central bank to combat high inflation, such as raising interest rates, or policies designed to increase the supply of goods and services, thereby putting downward pressure on prices. In a broader sense, anything that causes prices to decrease can be considered a deflating factor. The term is thus employed in discussions about economic stability and the management of inflation.