Complete the following statement explaining the difference between the CPI and the GDP deflator. _________ (The...

Complete the following statement explaining the difference between the CPI and the GDP deflator.

_________ (The CPI, The GDP deflator) measures the impact of price changes on the cost of a typical bundle of goods purchased by households, whereas ___________ (the GDP deflator, the CPI) measures the change in the average price of all goods and services included in GDP.

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Expert Solution

The CPI measures the impact of price changes on the cost of typical bundle of goods purchased by households.(CPI measures the changes in cost of a fixed basket of goods)

The GDP deflator measures the change in the average price of all goods and services included in GDP. (It helps in understanding the real economic growth)

Rahul Sunny answered 2 years ago

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