The GDP Deflator Is Different Than the CPI in That

question 82

Multiple Choice

The GDP Deflator is different than the CPI in that

• A)the GDP deflator includes everything while the CPI only includes what average people buy.
• B)the GDP deflator doesn't include food and energy prices.
• C)the CPI includes things businesses buy while the GDP deflator does not.
• D)the CPI is chain-based.

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Definitions:

Net Present Value

A financial metric that calculates the present value of all future cash flows (both inflows and outflows) of an investment, discounted back at a specific rate.

Rate of Return

The profit or deficit achieved from an investment during a certain timeframe, represented as a proportion of the investment's initial outlay.

Present Value Factors

Numerical factors used to calculate the present value of future cash flows by accounting for the time value of money.

Internal Rate of Return

A financial metric used to evaluate the profitability of potential investments by calculating the rate of return at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.