The price of CD players increases dramatically,causing a 1 percent increase in the CPI.The price increase will most likely cause the GDP deflator to increase by
A)more than 1 percent.
B)less than 1 percent.
C)1 percent.
D)None of the above is correct;this particular price increase will not affect the GDP deflator.

Question

Quizplus · Accepted Answer

The GDP deflator reflects the prices of all domestically produced goods and services, whereas the CPI reflects the prices of goods and services bought by consumers. Since CD players may include imported components, their price increase might not fully impact the GDP deflator as it does the CPI.

The Price of CD Players Increases Dramatically,causing a 1 Percent