The CPI Differs from the GDP Deflator in That

question 60

Multiple Choice

The CPI differs from the GDP deflator in that

• A)the CPI is a price index, while the GDP deflator is an inflation index.
• B)substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator.
• C)increases in the prices of foreign produced goods that are sold to U.S.consumers show up in the CPI but not in the GDP deflator.
• D)increases in the prices of domestically produced goods that are sold to the U.S.government show up in the CPI but not in the GDP deflator.

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Definitions:

Long-term Improvements

Enhancements or upgrades to property or assets that are expected to provide benefits over a period exceeding one year.

Principal's Beneficiary

An individual or entity that stands to benefit from the actions or decisions of a principal, especially in legal or financial contexts.

Durable Power

A legal document that grants someone authority to act on another's behalf in legal matters, which continues to be effective even if the grantor becomes incapacitated.

Incapacitated

A state where an individual is unable to make decisions for themselves due to physical or mental limitations.