Which of the following statements about the GDP Deflator is CORRECT?

The GDP Deflator = (Nominal GDP ÷ Real GDP) × 100. It is a comprehensive measure of price changes covering all goods and services produced within the domestic economy — including consumer goods, investment goods, government services, and exports — but excluding imports. Unlike CPI, the GDP Deflator does not use a fixed basket; it automatically adjusts to reflect the current composition of GDP, making it broader but potentially slower to reflect the consumer's experience. CPI uses a fixed basket and specifically tracks consumer expenditure, including imported goods. This is why CPI and the GDP Deflator can diverge — a rise in oil import prices raises CPI but has little impact on the GDP Deflator since imports are excluded from GDP.