The GDP deflator is
A) an index that utilizes a consumer's market basket of goods in calculating the inflation rate.
B) the most general indicator of inflation since it measures changes in the prices of all goods and services in the economy.
C) an index used to calculate inflation at the wholesale level.
D) the least used index because it is so costly to calculate.
B
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Explain the differences between real GDP and nominal GDP
What will be an ideal response?
The questions of what to produce, how to produce, and for whom are answered by
a. free-market economies. b. economies that are a mixture of planning and markets. c. command economies. d. all economic systems in some manner.
Income is more unequally distributed:
a. than wealth b. today than it was 40 years ago c. at a point in time than over the course of a lifetime d. both b. and c.
A village has five residents, each of whom has an accumulated savings of $50. Each villager can use the money to buy a government bond that pays 10 percent interest per year or to buy a year-old goat, send it onto the commons to graze, and sell it after one year. The price of the goat that the villager will get at the end of the year depends on the amount of weight it gains while grazing on the commons, which in turn depends on the number of goats sent onto the commons, as shown in the table below. Assume that if a villager is indifferent between buying a bond and buying a goat, the villager will buy a goat.Number of goatson the commonsPrice per 2-yearold goat ($)Income pergoat ($/year)180302752537020465155555 If each villager is purely self-interested, how many goats will be sent onto
the commons? A. 5 B. 3 C. 2 D. 4