Question

Alternative price indexes 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 hovw 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 _______ using ______ by the _______ using ________ and multiplying by 100.
However, the CPI reflects only the prices of all goods and services _______.
Indicate whether the price change described in each scenario may affect the GDP deflator or the CPI for the United States.
Scenario Shows up in the...
GDP Deflator CPI
A decrease in the price of a Treewood handsaw, a popular chainsaw manufactured by Harvestwood Equipment in Bottleneck Springs, Arkansas
An increase in the price of a Chinese-made phone that is popular among U.S. consumers

Answer 1

Group of answer choices.

A) value of all foods and services produced in the economy this year.

B) bought by consumers.

C) value of all goods and services produced in the economy this year.

D) the base year's prices.

E) this year's prices.

Answer:

Find answers below.

Explanation:

Gross Domestic Products (GDP) is a measure of the total market value of all finished goods and services made within a country during a specific period.

Simply stated, GDP is a measure of the total income of all individuals in an economy and the total expenses incurred on the economy's output of goods and services in a particular country. The Gross Domestic Products (GDP) of a country's economy gives an insight to it's social well-being, these includes;

Real gross domestic product (Real GDP) may be adjusted for price level changes using a price index. This simply means, it is adjusted for inflation to measure the value of goods and services produced by a country in a specific period of time.

Mathematically, $Real GDP = \frac {Nominal GDP}{GDP deflator}$

1. The GDP deflator for this year is calculated by dividing the value of all goods and services produced in the economy this year using this year's prices by the value of all foods and services produced in the economy this year using the base year's prices and multiplying by 100.

However, the CPI reflects only the prices of all goods and services bought by consumers.

2. CPI: A decrease in the price of a Treewood handsaw, a popular chainsaw manufactured by Harvestwood Equipment in Bottleneck Springs, Arkansas.

3. GDP Deflator: An increase in the price of a Chinese-made phone that is popular among U.S. consumers.