Which of the following statements highlights the difference between the CPI (consumer price index) and the GDP deflator?
A) The CPI measures the average prices of inputs in the production process, whereas the GDP deflator measures the average prices of goods and services purchased by consumers.
B) The CPI measures the average prices of retail goods and services, whereas the GDP deflator measures the average prices of wholesale goods.
C) The CPI measures the average prices of goods and services consumed by typical consumers, whereas the GDP deflator measures the average prices of all goods and services in the economy.
D) The CPI measures the average prices of all final goods and services purchased by consumers, whereas the GDP deflator measures the average prices of all inputs used in the economy.

Question

Quizplus · Accepted Answer

The CPI is a measure of the average prices of goods and services consumed by typical consumers, whereas the GDP deflator is a measure of the average prices of all goods and services produced in the economy, regardless of whether they are consumed by consumers or used as inputs in production.

Which of the Following Statements Highlights the Difference Between the CPI