Final answer:
The statement is false; the GDP deflator measures the average prices of all final goods and services in the economy, not a fixed market basket of goods.
Step-by-step explanation:
The statement that the GDP deflator examines a market basket of goods to track prices across time is false. The GDP deflator is a price index that measures the average prices of all the final goods and services included in the economy, not just a fixed basket of goods. This differentiates it from the Consumer Price Index (CPI), which does use a basket of goods that represents typical consumer purchases. It's important to track inflation because it can distort economic statistics and our understanding of the economy's performance over time. The GDP deflator reveals the extent to which the increase in GDP is influenced by changes in the price level by comparing the GDP at current prices to GDP at constant prices.