Explanation:

3rd option is correct.

A deflator is a technique or a statistical measure used to adjust nominal values for changes in price levels, thereby providing a measure of the real value or quantity. The deflator is often applied to economic indicators to account for inflation or deflation and express values in constant or real terms.

In the context of economics, the most common use of a deflator is in the calculation of real GDP (Gross Domestic Product). The GDP deflator is a measure that adjusts the nominal GDP to reflect changes in the price level, allowing for a more accurate assessment of economic growth or contraction in real terms.

The formula for the GDP deflator is:

GDP Deflator=(Nominal GDPReal GDP)×100GDP Deflator=(Real GDPNominal GDP?)×100

It represents the average price level of all final goods and services produced in an economy relative to the base year. A rising GDP deflator indicates inflation, while a falling deflator suggests deflation.

Deflators are also used in various other economic indicators, such as consumer spending, investment, and government expenditure, to adjust for changes in the price level and derive real values that account for inflation or deflation.