Which of the following is correct?
A)The GDP deflator is better than the CPI at reflecting the goods and services bought by consumers.
B)The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers.
C)The GDP deflator and the CPI are equally good at reflecting the goods and services bought by consumers.
D)The GDP deflator is more commonly used as a gauge of inflation than the CPI is.

Question

Quizplus · Accepted Answer

The CPI (Consumer Price Index) is specifically designed to measure the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, making it better at reflecting the goods and services bought by consumers compared to the GDP deflator, which reflects the prices of all domestically produced goods and services in an economy.

Which of the Following Is Correct