The consumer price index (CPI)and the GDP deflator are designed to measure the degree to which
A)there have been changes in the proportions of national income generated by (and thus earned by)the rich relative to the poor.
B)the cost of purchasing a bundle of goods has changed over time.
C)consumption patterns have changed with time.
D)consumer prices have risen over and above increases in worker wages.

Question

Quizplus · Accepted Answer

Both the CPI and GDP deflator are measures of inflation, specifically changes in the prices of goods and services over time. The CPI measures the price changes for a specific basket of goods and services purchased by households while the GDP deflator measures the price changes for all goods and services produced in an economy. Therefore, both measures are designed to specifically measure changes in the cost of purchasing a bundle of goods.

The Consumer Price Index (CPI)and the GDP Deflator Are Designed