When adjusting nominal GDP for price changes, it is preferable to use the GDP deflator rather than the consumer price index because
a. the GDP deflator is calculated for a narrow market basket of goods, approximating those items included in our measure of consumption expenditures.
b. the GDP deflator calculates changes in the prices of items that more closely approximate those included in GDP.
c. the GDP deflator is always less than the consumer price index, and therefore, it is a more stable index.
d. the GDP deflator is the sum of the consumer price index and the wholesale price index.
B
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When MSC > MPC, there are detrimental externalities.
Answer the following statement true (T) or false (F)
If the consumer is willing to give up 3 units of food (vertical axis) in exchange for one unit of shelter (horizontal axis) and food is priced at 10 and shelter at 20, then the consumer is purchasing
A. just the right amount of each good for utility maximization. B. too much food for utility maximization. C. less than the budget would allow. D. too much shelter for utility maximization.
Because of the relationship among ethanol production, sugar, and corn the authors of your text have concluded that:
a. the corn subsidy is a big problem for ethanol exports. b. the sugar quota makes sugar so cheap in the United States that ethanol producers are using it instead of corn. c. due to the sugar quota and its high price, there is a huge demand for less environmentally friendly corn as a substitute in food products and for ethanol. d. ethanol should be imported rather than exported.
An economist would be most likely to advocate for regulation under which of the following scenarios?
A. It was politically popular. B. Scientific evidence suggested regulation was an appropriate solution. C. There was a strong philosophical argument in favor of regulation. D. Never. Economists find all regulation to be inefficient.