Most, but not all, athletic apparel sold in Canada is imported from other nations. If the price of athletic apparel increases, what will happen to the GDP deflator?

Question

Quizplus · Accepted Answer

The GDP deflator reflects the prices of all goods and services produced within the country, including those that are imported. However, since athletic apparel is imported, when its price increases, the impact on the GDP deflator will be less than the impact on the consumer price index (CPI), which reflects the prices of goods and services purchased by consumers. Therefore, choice A is the best answer.

Most, but Not All, Athletic Apparel Sold in Canada Is