In General,if a Consumer Good Is Produced Domestically and Consumed

question 179

Multiple Choice

In general,if a consumer good is produced domestically and consumed domestically,an increase in its price will have which of the following effects?

• A)The consumer price index will increase relatively more than will the GDP deflator.
• B)The consumer price index and the GDP deflator will increase by the same amount.
• C)The consumer price index will increase relatively less than will the GDP deflator.
• D)One cannot generalize about the increase in the consumer price index relative to the increase in the GDP deflator.

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Definitions:

Carrying Inventory

The process of holding stock or goods in storage or in transit, with associated costs.

Terms of Sale

The conditions under which a seller will complete a sale, typically specifying the time and method of payment and when the buyer takes possession of the goods.

Credit Period

The duration of time a buyer is given by a seller to pay for a purchase.

Cash Discount

An incentive offered by sellers to encourage buyers to pay their invoice ahead of the due date.