A Korean company produces biscuits in Australia and exports all of them to Russia.If the price of the biscuits increases, then:

Question

Quizplus · Accepted Answer

The GDP deflator reflects the prices of all domestically produced goods and services in a country, so if the biscuits are produced in Australia, an increase in their price would raise the GDP deflator. However, since the biscuits are exported to Russia and not consumed domestically, they would not affect Australia's Consumer Price Index (CPI), which measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

A Korean Company Produces Biscuits in Australia and Exports All