Question

A decrease in the price of domestically produced industrial robots will be reflected in Group of answer choices both the GDP deflator and the consumer price index. neither the GDP deflator nor the consumer price index. the GDP deflator but not in the consumer price index. the consumer price index but not in the GDP deflator.

Answer 1

A decrease in the price of domestically produced industrial robots will affect the GDP deflator but not the consumer price index (CPI), as the CPI measures a basket of consumer goods and services, unlike the GDP deflator which encompasses all final domestic goods and services.

Step-by-step explanation:

A decrease in the price of domestically produced industrial robots will be reflected in the GDP deflator but not in the consumer price index (CPI). The CPI is a measure that examines the weighted average of prices of a basket of consumer goods and services, like transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Goods such as industrial robots do not directly fall into the typical consumer's basket but are considered in the broader scope of goods and services accounted for by the GDP deflator.

The GDP deflator is a broader measure of inflation within an economy as it includes all final goods and services produced domestically, including investment goods and government services that are not part of the consumer basket measured by the CPI. As industrial robots are part of the investment goods a country produces, a decrease in their price would directly affect the GDP deflator.

Answer 2

the GDP deflator but not in the consumer price index

Step-by-step explanation:

GDP deflator is the ratio of : Nominal GDP (value of goods & services at current prices) to Real GDP (value of goods & services at constant prices), multiplied by 100.

It reflects change in price level of all domestically produced final goods in an economy, during given years.

Consumer Price Index (CPI) indicates price change in market basket of consumer goods & services purchased by households. It is statistically measured based on weighted average of various market basket commodities.

A decrease in price of domestically produced industrial robots : will effect (reduce) GDP deflator, as it includes all final goods & services. But it will not effect CPI as it includes only household consumer goods.