What is the difference between GDP and GNP deflator rate?

Economics Gdp Questions



54 Short 80 Medium 70 Long Answer Questions Question Index

What is the difference between GDP and GNP deflator rate?

The difference between GDP and GNP deflator rate lies in the measures they use to calculate inflation. GDP deflator rate measures the average price change of all goods and services produced within a country's borders, regardless of who owns the production factors. On the other hand, GNP deflator rate measures the average price change of all goods and services produced by a country's residents, regardless of where the production takes place. In essence, GDP deflator rate focuses on domestic production, while GNP deflator rate takes into account the production of a country's residents, whether it occurs domestically or abroad.