Question

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.
Scenario Shows up
in the...
GDP Deflator
Index CPI
An increase in the price of a Chinese-
made phone that is popular among
U.S. consumers.
A decrease in the price of a Treewood
Equipment feller buncher, which is a
commercial forestry machine made in
the U.S. but not bought by U.S. consumers.

Answer 1

Answer and Explanation:

The consumer price index refers to an index in which the prescribed market cost of goods & services by the prices years from the base year prices of the prescribed market basket and then it is multiplied by 100.

But the Gross Domestic Inflator would be represented when the all types of prices of goods and services generated domestically

An increase in the price refelected the GDP deflator

And, the decrease in the price of treewood represents CPI