The CPI:
A)includes fewer goods and services than the GDP deflator.
B)generally rises substantially slower than the GDP deflator during inflationary conditions.
C)ignores imported goods purchased by consumers.
D)is the broadest generally reported measure of inflation.

Question

The CPI:
A)​includes fewer goods and services than the GDP deflator.
B)​generally rises substantially slower than the GDP deflator during inflationary conditions.
C)​ignores imported goods purchased by consumers.
D)​is the broadest generally reported measure of inflation.

Quizplus · Accepted Answer

The GDP deflator includes all products produced domestically, while CPI includes a more limited set of goods and services commonly consumed by individuals.

Answer: B 
 The GDP deflator includes investment and government spending, along with consumption, which can increase at different rates than the consumer price index in inflationary conditions.

Answer: C 
 The CPI excludes imported goods, while the GDP deflator includes all goods produced domestically, whether they are consumed or invested in.

Answer: D 
 The CPI is a commonly reported measure of inflation that is widely used by individuals and businesses to track changes in the cost of goods and services over time.