Explanation Option (d) Even though the gun is part of GDP, it is not part of the basket of goods and services bought by a typical consumer. Thus, the price hike shows up in the GDP deflator but not in the CPI. Thus, option‘d’ is correct. Option (a) The rise in price of rifle does not affect the CPI as it is not bought by a typical consumer part of the basket of goods and services...

Theprice hike and its affect on CPI and GDP deflator.

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN: 9781305971509

Author: N. Gregory Mankiw

Publisher: Cengage Learning

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Chapter 11, Problem 3CQQ

To determine

Theprice hike and its affect on CPI and GDP deflator.

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