Most, but not all, athletic apparel sold in Canada is imported from other nations. If the price of athletic apparel increases, what will happen to the GDP deflator?

Question

Quizplus · Accepted Answer

The GDP deflator measures the overall price level of all goods and services produced in an economy, while the consumer price index measures the price level of a specific basket of consumer goods and services. If the price of athletic apparel increases, the GDP deflator will increase because athletic apparel is a component of GDP. However, the consumer price index will increase more than the GDP deflator because athletic apparel is only a small part of the consumer price index basket.

Most, but Not All, Athletic Apparel Sold in Canada Is