Which of the Following Statements Is Correct

question 5

Multiple Choice

Which of the following statements is correct?

• A)The CPI can be used to compare dollar figures from different points in time.
• B)The percentage change in the CPI is a measure of the inflation rate,but the percentage change in the GDP deflator is not a measure of the inflation rate.
• C)Compared to the consumer price index (CPI),the GDP deflator is the more common gauge of inflation.
• D)The GDP deflator better reflects the goods and services bought by consumers than does the CPI.

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Definitions:

Net Exports

The difference between a country's total value of exports and its total value of imports, indicating whether it has a trade surplus or deficit.

Purchasing-power Parity

A theory in economics that states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

Nominal Exchange Rate

The rate at which one currency can be exchanged for another without adjusting for inflation.

Prices

The amount of money required to purchase a good or service.