If the price of Spanish olives imported into the United States decreases,then
A)both the GDP deflator and the consumer price index will decrease.
B)neither the GDP deflator nor the consumer price index will decrease.
C)the GDP deflator will decrease,but the consumer price index will not decrease.
D)the consumer price index will decrease,but the GDP deflator will not decrease.

Question

Quizplus · Accepted Answer

A decrease in the price of Spanish olives would lead to a decrease in the price level of the consumer basket, which is used to calculate the consumer price index. Therefore, the consumer price index would decrease. However, the GDP deflator is a broader measure of the overall price level in the economy, and would not necessarily be affected by a decrease in the price of Spanish olives alone. Therefore, the GDP deflator would not decrease.

If the Price of Spanish Olives Imported into the United