The GDP Deflator Is Not a Fixed-Quantity Price Index, but the CPI

question 377

Multiple Choice

The GDP deflator is not a fixed-quantity price index, but the CPI is. What is the significance of this fact?

• A)The GDP deflator does not include enough items in its market basket.
• B)A base year cannot be defined for the GDP deflator.
• C)The GDP deflator reflects not only changes in prices, but also changes in consumption patterns as consumers substitute between goods.
• D)The GDP deflator overstates the true rate of inflation, whereas the CPI understates it.

---

Definitions:

Physical Surroundings

The external environment or setting in which individuals work, affecting comfort, mood, and performance.

Equipment Used

Refers to the tools, machinery, and devices that are employed to carry out specific tasks within a work environment.

Job Enrichment

Adding more responsibilities and autonomy to a job, giving the worker greater powers to plan, do, and evaluate job performance.

Job Rotation

The practice of moving employees through a series of job assignments in different areas of the company to broaden their skills and experiences.