What is a GDP deflator? Why do some economists consider the GDP deflator to be a better measure of overall inflation than the Consumer Price Index?
The price index used to deflate nominal GDP is called the GDP deflator. It is a broad measure of economywide inflation; it includes the prices of all goods and services in the economy. Some economists consider the GDP deflator to be a better measure of overall inflation than the Consumer Price Index. The main reason is that the GDP deflator is based on a broader market basket. The CPI is based on the budget of a typical urban family. By contrast, the GDP deflator is constructed from a market basket that includes every item in the GDP?that is, every final good and service produced by the economy.
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Expenditures for services such as tourism, income for foreign investment, and foreign gifts are tabulated in the:
a. current account. b. capital account. c. official reserve account. d. goods account.
In which of the following decades did the American government take a more "hands off" or "let it alone" approach in its role in the economy?
A. 1970s B. 1940s C. 1930s D. 1920s
Which of the following could be called a virtue of raising prices of depletable resources? (i) It would discourage consumption and waste. (ii) It would stimulate more efficient use of resources. (iii) It would encourage innovation and discovery of alternatives.
A. i, ii, and iii B. Only i C. Only ii D. Only iii
when the inflation rate is high and volatile
What will be an ideal response?