When the price of nuclear missiles rises, this change is reflected in the CPI but not in the GDP deflator.

Question

Quizplus · Accepted Answer

The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, while the GDP deflator measures the change in prices of all new, domestically produced, final goods and services in an economy. Nuclear missiles, being military expenditures, are not included in the CPI because they are not consumer goods or services. However, they are included in the GDP deflator as part of government spending on goods and services.

When the Price of Nuclear Missiles Rises, This Change Is