The CPI does a better job than the GDP deflator at measuring changes in the
A) cost of living as experienced by the typical household.
B) standard of living as experienced by the typical household.
C) the price level for the whole economy.
D) the price level for corporations.

Question

Quizplus · Accepted Answer

The CPI is specifically designed to measure the changes in the cost of living for the typical household by tracking the price changes of a fixed basket of goods and services consumed by households. On the other hand, the GDP deflator measures changes in the overall price level for the entire economy, including goods and services purchased by households, businesses, and the government, and therefore, doesn't capture changes in the cost of living for the typical household as accurately as the CPI.

The CPI Does a Better Job Than the GDP Deflator