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For the Purpose of Measuring the Cost of Living for Consumers

Question 38

Multiple Choice

For the purpose of measuring the cost of living for consumers, one reason the GDP deflator is NOT a good substitute for the CPI is because it


A) compares current year prices with base year prices.
B) has a larger bias than does the CPI.
C) compares a current year basket of goods with a base year basket of goods.
D) and the CPI move in the same direction over time.
E) includes the prices of exported goods, which are not consumed in Australia.

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