If the goods producers buy change dramatically between years,then:
A) this would be reflected in both the consumer price index (CPI) and the gross domestic product (GDP) deflator.
B) this would not be reflected in either the CPI or the GDP deflator.
C) it would mean the market basket would be automatically updated to reflect the changes.
D) this would be reflected in the GDP deflator but not the CPI.
E) menu costs would fall.

Question

Quizplus · Accepted Answer

The GDP deflator measures the prices of all the goods and services produced domestically, while the CPI only measures the prices of goods and services consumed by households. Therefore, if the goods producers buy change dramatically, it would be reflected in the GDP deflator but not necessarily in the CPI.

If the Goods Producers Buy Change Dramatically Between Years,then