The price of imported athletic shoes produced by a Canadian company operating in Thailand increases.By itself,what effect will this change have on the Canadian GDP deflator and CPI?

Question

Quizplus · Accepted Answer

The GDP deflator measures the overall price level of goods and services produced in an economy, including both domestic and imported goods. Since only the price of imported athletic shoes has increased, this change will not have a significant impact on the overall price level of goods and services produced in Canada. Therefore, the GDP deflator will be unaffected. On the other hand, the CPI measures the price level of a basket of goods and services consumed by households. Since athletic shoes are a part of this basket, the increase in the price of imported athletic shoes will lead to an increase in the CPI.

The Price of Imported Athletic Shoes Produced by a Canadian