An increase in the price of imported coffee shows up
A)in the consumer price index and in the GDP deflator.
B)in the consumer price index,but not in the GDP deflator.
C)in the GDP deflator,but not in the consumer price index.
D)in neither the consumer price index nor in the GDP deflator.

Question

Quizplus · Accepted Answer

Imported coffee is a consumption item and its price increase will be reflected in the consumer price index (CPI) which measures the price changes of consumption goods and services consumed by households. 
The GDP deflator, on the other hand, measures the overall level of prices in an economy, including investment and government spending. An increase in the price of imported coffee would not affect the prices of investment or government spending goods, so it would not affect the GDP deflator.

An Increase in the Price of Imported Coffee Shows Up