Options:- 1 - Value of all goods and servies produced in the econemy in the base

Question

Options:-

1 - Value of all goods and servies produced in the econemy in the base year
- cost of a given market basket of goods and services
- value of all goods and servies produced in the econemy this year

2 - This base year's prices
- This year's price.

3 - Value of all goods and servies produced in the econemy in the base year
- cost of a given market basket of goods and services
- value of all goods and servies produced in the econemy this year

4 - This base year's prices
- This year's price.

5 - Bought by consumers
- Produced donestically

2. Alternative price indexes Because there isn't one single measure of inflation, the government and researchers use a variety of methods to get the most balanced picture of how prices fluctuate in the economy. Two of the most commonly used price indexes are the consumer price index (CPI) and the GDP deflator. The GDP deflator for this year is calculated by dividing the using by the using and multiplying by 100. However, the CPI reflects only the prices of all goods and services Indicate whether each scenario will affect the GDP deflator or the CPI for the United States. Check all that apply. Shows up in the. GDP Deflator CPI Scenario A decrease in the price of a German-made phone that is popular among U.S. consumers An increase in the price of a Waterman Industries deep-water reel, which is a commercial fishing product used for deep- sea fishing

Explanation / Answer

The following are the answers

1. value of all goods and servies produced in the econemy this year

2. This year's price

3.  Value of all goods and servies produced in the econemy in the base year

4. This base year's prices

i.e. The GDP Deflator for this year is calculated as

(Nominal GDP / Real GDP) * 100

or (   Value of all goods and servies produced in the econemy in the current year at using that year's prices/

Value of all goods and servies produced in the econemy in the base year at base year's prices )

* 100

5. Bought by consumers

Scenario1. Shows up only in the CPI

Scenario2. Shows up in both the GDP deflator and CPI

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