The CPI Differs from the GDP Deflator in That

question 183

Multiple Choice

The CPI differs from the GDP deflator in that

• A)the CPI is an inflation index,while the GDP deflator is a price 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 GDP deflator but not in the CPI.
• D)increases in the prices of domestically produced goods that are sold to the U.S.government show up in the GDP deflator but not in the CPI.

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Definitions:

Joint Tenancy

A form of co-ownership where two or more persons hold equal shares of a property with rights of survivorship, meaning when one owner dies, their share automatically passes to the remaining owner(s).

Tenants

Individuals or entities that occupy property or land rented from a landlord and are subject to the terms of a lease.

Tenancy in Common

A form of joint ownership of property in which each owner holds an undivided interest without right of survivorship.

Corporation

A legal entity separate from its owners, providing limited liability protection to its shareholders, and possessing the ability to own property, enter contracts, and sue or be sued.