A decrease in the price of large tractors imported into the United States from Russia
A)leaves the GDP deflator unchanged but decreases the consumer price index.
B)decreases the GDP deflator but leaves the consumer price index unchanged.
C)decreases both the GDP deflator and the consumer price index.
D)leaves both the GDP deflator and the consumer price index unchanged.

Question

Quizplus · Accepted Answer

The decrease in the price of large tractors imported into the United States from Russia would not affect the GDP deflator, as it only measures price changes of all final goods and services produced within a country's borders, whereas the tractors are imported. Similarly, the consumer price index would also remain unchanged because tractors are not commonly consumed by households, and therefore, their prices are not included in the basket of goods used to calculate the index. Thus, neither the GDP deflator nor the consumer price index would be affected, resulting in choice D being the correct answer.

A Decrease in the Price of Large Tractors Imported into the United