6. The Consumer Price Index (CPI) Which of the following is not included in the

Question

6. The Consumer Price Index (CPI) Which of the following is not included in the consumer price index (CPI)? Household purchases of foreign cars Household purchases of used computers Capital equipment purchases by businesses For which of the following is the CPI not used? Calculating real GDP from nominal GDP Setting an inflation target Indexing payments Which of the following goods are included in both the CPI and the GDP deflator? U.S. cars purchased by foreigners Fruits produced in the United States and consumed by U.S. households Household purchases of used computers

Explanation / Answer

6. Option c.

CPI includes only purchases related to households.

It hence includes the household purchases of foreign cars and used computer but not the capital equipment purchases.

7. Option A.

CPI is usually used for indexing payments

And it is used to calculate inflation.

But it is not used to calculate real GDP from the nominal GDP.

8. Option C.

All the goods bought by households are included in both the CPI and the GDP deflator.

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