The price of DVD players increases dramatically, causing a 1 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by

Question

Quizplus · Accepted Answer

The GDP deflator measures the average price level of all goods and services included in GDP, not just DVD players. Therefore, the price increase in DVD players will have a smaller effect on the GDP deflator than on the CPI, which only measures changes in the prices of consumer goods and services. Thus, the increase in GDP deflator is expected to be less than 1 percent.

The Price of DVD Players Increases Dramatically, Causing a 1