If the goods producers buy change dramatically between years,then
A) this would be reflected in both the consumer price index (CPI)and the gross domestic product (GDP)deflator.
B) this would not be reflected in either the consumer price index (CPI)or the gross domestic product (GDP)deflator.
C) it would mean the market basket would be automatically updated to reflect the changes.
D) this would be reflected in the gross domestic product (GDP)deflator but not the consumer price index (CPI).
E) menu costs would fall.

Question

Quizplus · Accepted Answer

The GDP deflator is a measure of the price level in the economy, which takes into account the prices of all goods and services produced, including those purchased by producers. Therefore, if the goods producers buy change dramatically between years, it would be reflected in the GDP deflator but not necessarily in the CPI. The CPI, on the other hand, only measures the prices of a fixed basket of goods and services purchased by consumers.

If the Goods Producers Buy Change Dramatically Between Years,then