What does the GDP deflator measure
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Measures of Inflation The GDP deflator is the broadest, most inclusive measure of change in the country's price level since it includes all final goods and services produced and sold. But the GDP deflator is not used by the government or economists as the benchmark measure of inflation; instead, the consumer price index (CPI) is used to determine changes in the cost of living. What is the shortcoming of the GDP deflator as a measure of inflation for households, and why is the CPI considered to be a more useful measure?
What is the key difference between the Consumer Price Index(CPI) and the GDP deflator?
A. The two indexes measure price changes for different "baskets" of products.
B. The GDP deflator includes imports, while the CPI only includes domestically produced goods and services.
C. The formulas used to construct the indexes bear little resemblance to each other.
D. The CPI is broader in coverage than is the GDP deflator.