The CPI differs from the GDP deflator in that the CPI includes
A) Raw material prices whereas the GDP deflator does not.
B) Only goods whereas the GDP deflator includes both goods and services.
C) Only services whereas the GDP deflator includes both goods and services.
D) Only items the typical household buys, whereas the GDP deflator includes all goods and services produced in the economy.

Question

Quizplus · Accepted Answer

CPI only measures the price level of a basket of goods and services typically consumed by households, while GDP deflator measures the price level of all goods and services produced in the economy. Therefore, the CPI includes only items the typical household buys, whereas the GDP deflator includes all goods and services produced in the economy.

The CPI Differs from the GDP Deflator in That the CPI