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 howprices 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 theHowever, the CPI reflects only the prices of all goods and servicesusingusingIndicate whether each scenario will affect the GDP deflator or the CPI for the United States. Check all that apply.ScenarioAn increase in the price of a South Korean-made coffee maker that is popular among U.S. consumersA decrease in the price of a Smooth Streets Industries pothole puncher, which is commercial construction equipment madein the U.S. but not bought by U.S. consumersby theand multiplying by 100.Shows up in the...GDPDeflatorCPIU

Answered: Because there isn't one single measure…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
However, the CPI reflects only the prices of all goods and services
using
using
Indicate whether each scenario will affect the GDP deflator or the CPI for the United States. Check all that apply.
Scenario
An increase in the price of a South Korean-made coffee maker that is popular among U.S. consumers
A decrease in the price of a Smooth Streets Industries pothole puncher, which is commercial construction equipment made
in the U.S. but not bought by U.S. consumers
by the
and multiplying by 100.
Shows up in the...
GDP
Deflator
CPI
U

Expert Solution

Step 1

GDP and CPI:

In economics, GDP in full form is Gross Domestic Product and measures the value of output manufactured in the United States. CPI's full form is Consumer Price Index and estimates inflation, a change in the general price level.

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