The CPI and the GDP Deflator

question 124

Multiple Choice

The CPI and the GDP deflator

• A)generally move together.
• B)generally show different patterns of movement.
• C)always show identical changes.
• D)always show different patterns of movement.

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Definitions:

Perfectly Elastic

Describes a situation where the quantity demanded or supplied of a product responds infinitely to even the smallest change in price.

Inelastic

Refers to a situation where the demand or supply of a good or service is relatively unresponsive to changes in price.

Price Effect

The impact on consumer demand and supply of goods caused by changes in the price of a product or service.

Quantity Effect

The impact on the total quantity bought or sold in a market as a result of changes in price.