A method of relating dollars from several different Fiscal Years (FYs) by removing the effects of inflation and showing all dollars to the value they would have in a specific Fiscal Year (FY) or Base Year (BY). Constant dollar series are derived by dividing current dollar estimates by appropriate annual price indices, a process generally known as deflating. The result is a time series reflecting prices as they would exist in the specified FY or BY - in other words, as if the dollar had constant purchasing power during that time. Any changes in prices would then reflect true changes in output. Constant dollar figures are commonly used for Gross Domestic Product (GDP) analysis and DoD cost-planning analysis studies.
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