The Consumer Price Index and the GDP Deflator Are Two

question 90

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 CPI involves a base year;the GDP deflator does not involve a base year.
• B)The CPI can be used to compute the inflation rate;the GDP deflator cannot be used to compute the inflation rate.
• C)The CPI reflects the prices of goods and services produced domestically;the GDP deflator reflects the prices of all goods and services bought by consumers.
• D)The CPI reflects a fixed basket of goods and services;the GDP deflator reflects current production of goods and services.

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Definitions:

Glass

A hard, brittle material typically made by melting sand with silicates, used in windows, bottles, and many other objects.

Wehrmacht

The unified armed forces of Nazi Germany from 1935 to 1945, comprising the Heer (army), Kriegsmarine (navy), and the Luftwaffe (air force).

Berlin

The capital and largest city of Germany, known for its history, culture, and role in global politics.

Reichstag

The historic parliament building in Germany, also used to refer to the parliamentary assemblies in the German Empire, Weimar Republic, Nazi Germany, and the Federal Republic.