Which Is the Most Accurate Statement About the GDP Deflator

question 98

Multiple Choice

Which is the most accurate statement about the GDP deflator and the consumer price index?

• A)The GDP deflator compares the price of a fixed basket of goods and services to the price of the basket in the base year,whereas the consumer price index compares the price of currently produced goods and services to the price of the same goods and services in the base year.
• B)The consumer price index compares the price of a fixed basket of goods and services to the price of the basket in the base year,whereas the GDP deflator compares the price of currently produced goods and services to the price of the same goods and services in the base year.
• C)Both the GDP deflator and the consumer price index compare the price of a fixed basket of goods and services to the price of the basket in the base year.
• D)Both the GDP deflator and the consumer price index compare the price of currently produced goods and services to the price of the same goods and services in the base year.

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Definitions:

Perfect Competitor

A theoretical market structure where numerous small firms sell identical products, and no single seller can influence the market price.

Monopolist

A monopolist is a sole provider of a good or service in a market, having the power to influence the price and quantity of the product.

Output Price

The price at which a product or service is sold in the market.

Monopolist

A single seller in a market with no close substitutes for the product, giving the seller market power.