One advantage of using the CPI over the GDP Deflator is that the CPI updates the basket of goods used to compute the index each month whereas the GDP Deflator maintains the same basket of goods for long periods of time.

Question

One advantage of using the CPI over the GDP Deflator is that the CPI updates the basket of goods used to compute the index each month whereas the GDP Deflator maintains the same basket of goods for long periods of time.​

Quizplus · Accepted Answer

The CPI does not update its basket of goods each month; it is updated less frequently, typically every few years, to reflect changes in consumer buying habits. The GDP Deflator, on the other hand, automatically adjusts as it reflects the prices of all goods and services produced domestically, changing with the composition of GDP.

One Advantage of Using the CPI Over the GDP Deflator