Question

1) Which of the following are included in the CPI, but not the GDP deflator?

Select one:

a. None of the other answers.

b. A truck produced in the U.S. and sold at a dealership in California.

c. A desk produced in California and sold to a UCSB student.

d. Belgian chocolates that are bought by a UCSB student.

2)

Chaz has $20 and lives in a city where the average cost of consumption is $10, while Aly has $10 and lives in a different city where the average cost of consumption is $15. Who is better off, Aly or Chaz?

Select one:

a. Not enough information provided.

b. Equally well off.

c. Chaz

d. Aly

3)

If the price of imported Belgian chocolate rises, is the CPI or the GDP deflator affected more?

Select one:

a. Both are affected the same.

b. Not enough information provided.

c. CPI.

d. GDP deflator.

Answer 1

Answer 1 . Belgain chocolates that are bought by the UCSB student is not included in GDP deflator but included in CPI.

Reason : Belgain chocolates would be included in the basket of the consumer goods for CPI and it is not included in GDP deflator because it is an imported goods. GDP only takes into account the goods and services that are produced domestically. So, Belgain chocolate it does not taken into an account.

Answer 2 : Chaz should be better off .

Reason : Chaz has $20 and average consumpation cost is $10 . So he saves $10 where as Aly has $10 but average consumpation cost is $15. Here aly needs $5 for fulfiling there consumpation . So aly is worse off and chaz is better off.

Answer 3 :As per situation there is not enough information

Reason : We cannot conclude that CPI is affected or not. It is not given that consumer should bought the chocolate or not. If consumer should bought the chocolate, than CPI has been affected as the consumer price index has been flucated but it is not given that this beligum chocolates has been bought by consumer or not.