Between 2004 and 2011, we observed a significant increase in commodity prices. In Australia, we would expect that this increase would cause:
A) no change in the CPI and an increase in the GDP deflator.
B) no change in the GDP deflator and an increase in the CPI.
C) a larger increase in the CPI compared to the GDP deflator.
D) a larger increase in the GDP deflator compared to the CPI.
E) an equal increase in the CPI and GDP deflator.

Question

Quizplus · Accepted Answer

Commodity prices are included in the GDP deflator but not necessarily in the CPI. Therefore, an increase in commodity prices would have a larger impact on the GDP deflator than on the CPI. Hence, we would expect a larger increase in the GDP deflator compared to the CPI (choice D).

Between 2004 and 2011, We Observed a Significant Increase in Commodity