Question

A decrease in the price of domestically produced industrial robots will be reflected in Group of answer choices both the GDP deflator and the consumer price index. neither the GDP deflator nor the consumer price index. the GDP deflator but not in the consumer price index. the consumer price index but not in the GDP deflator.

Answer 1

Answer:

the GDP deflator but not in the consumer price index

Explanation:

GDP deflator is the ratio of : Nominal GDP (value of goods & services at current prices) to Real GDP (value of goods & services at constant prices), multiplied by 100.

It reflects change in price level of all domestically produced final goods in an economy, during given years.

Consumer Price Index (CPI) indicates price change in market basket of consumer goods & services purchased by households. It is statistically measured based on weighted average of various market basket commodities.

A decrease in price of domestically produced industrial robots : will effect (reduce) GDP deflator, as it includes all final goods & services. But it will not effect CPI as it includes only household consumer goods.