The price of domestically produced DVD players increases dramatically, causing a 1 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by
a. (i) more than 1 percent.
b. (ii) less than 1 percent.
c. (iii) 1 percent.
d. None of (i), (ii), and (iii) is correct; this particular price increase will not affect the GDP deflator.
b. (ii) less than 1 percent.
You might also like to view...
Suppose that business firms spend $500 million on new capital equipment this year. Of this $500 million, $300 million was spent on domestically produced capital and $200 million was spent on foreign-produced capital
All else equal, these transactions contribute ________ to GDP. A) $0 B) $200 million C) $300 million D) $500 million E) $800 million
When a nation experiences economic growth:
A) its production possibilities curve shifts outward. B) its production possibilities curve shifts inward. C) it has been able to reach full employment. D) it has moved to a more consumer-oriented position on its production possibilities curve.
Which of the following is the best example of supply-side policy?
A. Inflation during the 1970s. B. The Reagan tax cuts in 1981. C. The government response to the Great Depression. D. Government policy before 1930.
To what extent can monetary policy be used to affect output in a fixed exchange rate regime? Explain
What will be an ideal response?