How Do the GDP Deflator and the Consumer Price Index

question 17

Multiple Choice

How do the GDP deflator and the consumer price index compare to each other?

• 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, but 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, but 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:

Algorithms

Step-by-step procedures or formulas for solving problems, often employed in the fields of mathematics and computer science.

Availability Heuristic

A cognitive shortcut that depends on the first examples that spring to mind when one assesses a particular topic, concept, strategy, or choice.

Framing Effect

The influence of context or the way information is presented on how it is perceived and interpreted.

Representativeness Heuristic

A mental shortcut used for making decisions or judgments, where the likelihood of an event is estimated based on how much it resembles the typical case.