Which statement about the GDP deflator is true?

While the GDP deflator provides insights into price changes, real GDP is a more accurate measure of economic well-being as it accounts for inflation and reflects the actual output of goods and services. The GDP deflator merely adjusts nominal GDP for inflation, but does not encompass other aspects of well-being such as income distribution or quality of life.

The GDP deflator does not follow a decreasing pattern; it can fluctuate due to various economic factors such as changes in demand, supply shocks, and shifts in monetary policy. In fact, it typically increases over time as economies experience inflation, making this statement inaccurate.

The GDP deflator is derived from the same core economic measurements that constitute GDP, including consumption, investment, government spending, and net exports. This statement incorrectly implies that the GDP deflator is based on a different set of measurements, when in fact it encompasses all components of GDP to assess price level changes.