The Consumer Price Index and the GDP Deflator Are Two

question 121

Multiple Choice

The consumer price index and the GDP deflator are two alternative measures of the overall price level.Which of the following statements about the two measures is correct?

• A)The two measures are constructed differently,but they always indicate the same inflation rate.
• B)The substitution bias applies equally to both measures.
• C)A change in the price of Korean televisions is reflected in the U.S.consumer price index but not in the U.S.GDP deflator.
• D)All of the above are correct.

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