An Important Difference Between the GDP Deflator and the Consumer

question 112

Multiple Choice

An important difference between the GDP deflator and the consumer price index is that

• A) the GDP deflator reflects the prices of goods and services bought by producers, whereas the consumer price index reflects the prices of goods and services bought by consumers.
• B) the GDP deflator reflects the prices of all final goods and services produced domestically, whereas the consumer price index reflects the prices of some goods and services bought by consumers.
• C) the GDP deflator reflects the prices of all final goods and services produced by a nation's citizens, whereas the consumer price index reflects the prices of final goods and services bought by consumers.
• D) the GDP deflator reflects the prices of all goods and services bought by producers and consumers, whereas the consumer price index reflects the prices of final goods and services bought by consumers.

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Definitions:

Assets

Resources owned by a company that have economic value and can provide future benefits.

Future Benefits

The projected economic advantages to be received from an investment, often used in evaluating the potential return from capital projects or investments.

Net Income

The amount of earnings remaining after all expenses, including taxes and costs, have been subtracted from total revenue.

Revenues

The total amount of money received by a company for goods sold or services provided during a specific period, before any deductions.