Suppose the CPI increased by 5 percent over each of the last 5 years while the GDP price index increased by 12 percent annually. Which of the following reasons could explain this difference? a.The price of investment goods purchased by businesses increased substantially relative to the prices of all other goods. b.The price of fighter planes dropped due to increased competition in the aerospace industry. c.The price of used goods increased substantially relative to the prices of other goods. d.Import good prices increased relative to domestic good prices.

If CPI increased considerably,used goods or consumer goods prices increased to a greater extent…

Answered: Suppose the CPI increased by 5 percent…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Measuring A Nation's Income

Section: Chapter Questions

Problem 6CQQ

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Suppose the CPI increased by 5 percent over each of the last 5 years while the GDP price index increased by 12 percent annually. Which of the following reasons could explain this difference?

	a.	The price of investment goods purchased by businesses increased substantially relative to the prices of all other goods.
	b.	The price of fighter planes dropped due to increased competition in the aerospace industry.
	c.	The price of used goods increased substantially relative to the prices of other goods.
	d.	Import good prices increased relative to domestic good prices.

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