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. The GDP deflator for this year is calculated by dividing the using by the using and multiplying by 100. However, the CPI 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 alI that apply. Shows up in the... GDP Deflator Scenario СРI A decrease 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 An increase in the price of a Chinese-made car that is popular among U.S. consumers
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Blank Answer #1:
value of all goods and services produced in the economy in the base year
cost of a given market basket of goods and services
value of all goods and services produced in the economy this year
Blank Answer #2:
this year's prices
the base year's prices
Blank Answer #3:
value of all goods and services produced in the economy in the base year
cost of a given market basket of goods and services
value of all goods and services produced in the economy this year
Blank Answer #4:
this year's prices
the base year's prices
Blank Answer #5:
produced domestically
bought by consumers
The GDP deflator is calculated by dividing the value of final goods and services produced in an economy during this year (nominal GDP) using this year's price by the value of goods and services produced during this year (real GDP) using base year's prices and multiplying by 100.
However CPI only reflects the prices of goods and services bought by consumers
In other words GDP deflator is given as
(Nominal GDP/ Real GDP)*100
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