Economics > Introductory Macroeconomics > National Income Aggregates

Read the following text carefully:
The Gross Domestic Product (GDP) deflator, is an important indicator of inflation. It represents the ratio of the total value of goods and services produced by an economy in a specific year at current prices to the prices that were in effect during a designated base year. This ratio highlights the proportion of GDP growth that can be attributed to rising prices instead of an actual increase in production levels.
The GDP price deflator indicates the difference between nominal GDP and real GDP. Nominal GDP differs from real GDP as the former doesn't include inflation, while the latter does.
The GDP deflator automatically adjusts for changes in consumption habits and introduction of new products and services. This feature enables it to reflect shifts in investment and consumption trends.
For the GDP deflator, the 'basket' for each year consists of all goods produced domestically, weighted according to the market value of total consumption for each item.

On the basis of given text and common understanding, answer the following questions:
State the meaning of Gross Domestic Product (GDP) deflator and its significance.