Question

If the price of Italian shoes imported into the United States increases, then a. both the GDP deflator and the consumer price index will increase. b. the consumer price index will increase, but the GDP deflator will not increase. c. the GDP deflator will increase, but the consumer price index will not increase. d. neither the GDP deflator nor the consumer price index will increase.

Answer 1

The consumer price index will increase, but the GDP deflator will not increase.

Step-by-step explanation:

If the price of Italian shoes imported into the United States increases, the correct answer is option b. The consumer price index will increase, but the GDP deflator will not increase.

The consumer price index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Since Italian shoes are a consumer good, an increase in their price would be reflected in the CPI.

On the other hand, the GDP deflator is a measure of the overall price level of all final goods and services produced within an economy. It takes into account the prices of goods and services produced by both consumers and businesses. Since the price increase of Italian shoes only affects consumer goods and not the overall production of goods and services, the GDP deflator would not increase.

Answer 2

Answer: The consumer price index will increase, but the GDP deflator will not increase.

Explanation:CPI(Consumer p ice index) is a concept used in Macroeconomics to mean the weighted average of the prices of

A basket of consumer goods and services.

GDP(gross domestic product) Is the value of the entire goods and services rendered within an economy over a given period of time.

GDP Deflator determines the price changes of all goods and services produced within an country.

As the price of Italian shoes imported into the Unites States of America rises the CPI INCREASES BUT THE GDP DEFLATOR WILL NOT INCREASE.