Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 16, Problem 3QR
To determine
Effect on
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Does an increase in the price of imported Frenchwine affect the CPI or the GDP deflator more? Why?
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Essentials of Economics (MindTap Course List)
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- Over a long period of time the CPI rose from 100 to 150. What does a CPI of 150 mean? If the price of imported vegetables rises, between the CPI and the GDP deflator, which one of the two will be affected more? Explain.arrow_forwardSuppose you are a senior public servant writing a bill to index Social Security and pensions. That is your bill will adjust these benefits to offset changes in the cost of living. Will you use the GDP deflator or the CPI? Explainarrow_forwardHow does the CPI compare the cost of the typical market basket of goods and services?arrow_forward
- If only cars and bikes are sold in a country and the consumer price index(CPI) has exceeded the GDP deflator what does this mean for the prices of the cars and the bike? they remain the same? Do they change differently? how does the GDP deflator supposed to move with CPI?arrow_forwardOver a long period of time, the price of a candybar rose from $0.20 to $1.20. Over the same period,the CPI rose from 150 to 300. Adjusted for overallinflation, how much did the price of the candy barchange?arrow_forwardIn each scenario, determine the effects on the CPI and the GDP deflator. A local manufacturer raises the price of the industrial tractors it produces.arrow_forward
- Define the term consumer price index (CPI)?arrow_forwardIn each of the following cases, does the increase in prices affect CPI, GDP deflator, or both in Pakistan? Analyze and justify your answer (in detial). The price of imported capital goods used in the production of sugar has increased. The price of Tapal tea has increased.arrow_forwardIn compiling data for the CPI, the Bureau of Labor Statistics makes no attempt to adjust the data to reflect quality changes.” True or false? Explain.arrow_forward
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