Considering the other variables constant which of the following statement is true? a) The CPI is less than the GDP deflator b) The CPI is greater than the GDP deflator c) The CPI and the GDP deflator are always equal d) The CPI and the GDP deflator are not always equal
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Considering the other variables constant which of the following statement is true?
a) The
b) The CPI is greater than the GDP deflator
c) The CPI and the GDP deflator are always equal
d) The CPI and the GDP deflator are not always equal
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Solved in 3 steps
- One difference between the CPI and the GDP deflator is CPI uses a fixed basket, Deflator uses current production quantities CPI use current production quantities, Deflator uses a fixed basket of goods CPI measures price changes for consumer goods only, GDP deflator measures price changes for producer goods only CPI excludes imported goods while the deflator does not[Consider the effects of an increase in the global price of oil. For a country such as Australia, which is a net exporter of oil, this development will imply that the CPI will increase roughly by the same amount as the increase in the GDP deflator.how would an increase in the price of Starbucks coffee effect the CPI and GDP deflator? both would rise CPI would raise but the deflator would stay constant CPI would stay constant but the deflator would rise both would fall
- Explain the differences between the Consumer Price Index (CPI) and the GDP deflatorExplain why changes in the cost of living for any particular individual or family may differ from changes in the official cost-of-living-index, the CPI.Do these three measures avoid the sources of bias in the CPI? These measures _______. A. avoid the sources of bias in the CPI by giving extra weight to the goods and services with the most volatile prices B. do not overcome the sources of bias in the CPI C. avoid the sources of bias in the CPI by eliminating goods and services with the most volatile prices D. avoid the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities
- There are a number of statistics computed to measure the price level of an economy, such as the GDP deflator and the CPI. The choice of which of these measures to use depends in many cases on the specific question you are interested in. For each of the following situations, explain whether the CPI or the GDP deflator is a more appropriate measure to use and explain why the statistic is preferred. (a) The government is interested in whether increases in defense spending are affecting the price level. (50 words) (b) An economic consulting firm is investigating the impact on the aggregate price level of more computers and electronic technology used in production.Label each statement according to whether it describes the consumer price index (CPI) or GDP deflator. Statements may describe one, both, or neither of the terms. If both labels apply, place both in the box. If neither applies, leave the box blank. 1. Is equal to 100 for the base year 2. is based on commonly used consumer goods only 3. includes the quantity and price of a 747 aircraft produced 4. equals nominal GDP divided by real GDP, times 100 5. uses the same price for goods in the market basket and adjusts quantities to reflect changes over time 6. is subject to biases because it does not reflect changes in buying patterns 7. would include the price of imported tomatesSuppose that the prices of capital goods (goods purchased by firms as investment) rose. How would the GDP deflator change: Decrease, Increase or No change? How would the CPI change: Decrease, Increase, or No change? GDP deflator: CPI:
- In Felixania, cat food constitutes 45 percent of the typical basket of goods for a typical consumer, dog food constitutes 3 percent, and all other goods constitute the remaining 52 percent. Assume the price of cat food rises by 4 percent, the price of dog food falls by 10 percent, and prices remain constant for all other goods. Based on the information given, we can definitely say CORRECT ANSWER: the consumer price index (CPI) in Felixania is more than in the previous year. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.An increase in the price of Dell computers manufactured in Austin Texas and purchased by Americans will be reflected in: Group of answer choices both the US GDP deflator as well as the US CPI. the US GDP deflator but not the US CPI. neither the US GDP deflator as well as the US CPI. the US CPI but not the US GDP deflator.If the price of imported extra virgin olive oil decreases, then both the GDP deflator and the consumer price index will decrease. neither the GDP deflator nor the consumer price index will decrease. the GDP deflator will decrease, but the consumer price index will not decrease. the consumer price index will decrease, but the GDP deflator will not decrease.