When Adjusting Nominal GDP for Price Changes, It Is Preferable

question 120

Multiple Choice

When adjusting nominal GDP for price changes, it is preferable to use the GDP deflator rather than the consumer price index because the GDP deflator is

• A) calculated for a more general market basket of goods than the consumer price index.
• B) always less than the consumer price index and, thus, is a more stable index.
• C) the sum of the consumer price index and the wholesale price index.
• D) the only price index adjusted annually for changes in the quality of products.

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