Double Deflation
- January 4, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Double Deflation
Subject – Economy
Context – growth rate of real GDP is contaminated by the “double deflation problem”.
Concept –
- In the double deflation method, real value added is measured as the difference between real gross output and real intermediate inputs.
- Double deflation is the technique used to estimate real value added of an industry.
- Double deflation is the conceptually preferred method of computing real value added because it requires fewer assumptions about the relationships among gross output and intermediate inputs.