Question

Homework (Ch 11) Back to Assignment Attempts: 08 Average: 0.8/2 2. Alternative price indexes Because there isn't one single measure of inflation, the government and researchers use a variety of methods to get the most balanced picture of how prices fluctuate in the economy. Two of the most commonly used price indexes are the consumer price index (CPI) and the GDP deflator. using The CPI for this year is calculated by dividing the by the using and multiplying by 100. However, the GDP deflator reflects only the prices of all goods and services Indicate whether each scenario will affect the GDP deflator or the CPI for the United States. Check all that apply. Shows up in the... GDP Deflator CPI Scenario An increase in the price of a Waterman Industries deep water reel, which is a commercial fishing product used for deep-sea fishing, made in the U.S., but not bought by U.S. consumers BI 06 40 O

Answer 1

Ans) the answers to the blanks are :

1) value of all goods and services produced in the economy this year

2) this years prices

3) value of all goods and services produced in the economy this year

4) the base years prices

5) bought by consumers.

Answer 2

The CPI of this year is calculated by diving the price of the consumption basket using the current year by the price of the same consumption bundle by base year and multiplying by 100. However the GDP deflator reflects only the prices of goods and services of the current year.

an increase in the price of a waterman industries deep water reel,which is a commercial fishing product used for deep sea fishing, made in us but not bought by us consumers - this will deflect GDP deflator.