Question

If the price of Italian shoes imported into the United States increases, then a. both the GDP deflator and the consumer price index will increase. b. the consumer price index will increase, but the GDP deflator will not increase. c. the GDP deflator will increase, but the consumer price index will not increase. d. neither the GDP deflator nor the consumer price index will increase.

Answer 1

Answer: The consumer price index will increase, but the GDP deflator will not increase.

Explanation:CPI(Consumer p ice index) is a concept used in Macroeconomics to mean the weighted average of the prices of

A basket of consumer goods and services.

GDP(gross domestic product) Is the value of the entire goods and services rendered within an economy over a given period of time.

GDP Deflator determines the price changes of all goods and services produced within an country.

As the price of Italian shoes imported into the Unites States of America rises the CPI INCREASES BUT THE GDP DEFLATOR WILL NOT INCREASE.