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

The CPI measures the prices of a fixed basket of goods and services purchased by a typical household, whereas the GDP deflator represents the prices of all goods and services produced in the economy. Therefore, the CPI only includes items that the typical household buys, as opposed to all goods and services produced in the economy, which are included in the GDP deflator.

The CPI Differs from the GDP Deflator in That the CPI