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Unformatted text preview: o GDP deflator Similar to consumer price index Includes capital goods unlike CPI CPI is heavily dominated by services • Labor and productivity changes are very slow, as opposed to manufacturing, which causes inflation-Real GDP= o Σ P07 x Q07 / (P07/P00)= Σ P07 x Q 07 x P00/P07= Σ Q07 x P00-Intermediate Goods and the Avoidance of Double Counting o We include goods only at the final sale of the good o If it is in the non-market sector then it is not included in GDP o Do-it-yourself is not included in GDP o One exception: renting homes...
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