An increase in the price of imported goods will show up in:
A) the CPI but not in the GDP deflator.
B) the GDP deflator but not in the CPI.
C) both the CPI and the GDP deflator.
D) neither the CPI nor the GDP deflator.

Question

Quizplus · Accepted Answer

The CPI (Consumer Price Index) includes prices of imported goods as it measures the cost of a basket of goods and services purchased by households, which can include imports. The GDP deflator, however, only includes goods and services produced domestically.

An Increase in the Price of Imported Goods Will Show