An increase in the price of imported coffee shows up a. in neither the consumer price index nor in the GDP deflator. b. in the consumer price index, but not in the GDP deflator. c. in the GDP deflator, but not in the consumer price index. d. in the consumer price index and in the GDP deflator.

Question

Tony Griffith

Business

14 July, 22:11

An increase in the price of imported coffee shows up a. in neither the consumer price index nor in the GDP deflator. b. in the consumer price index, but not in the GDP deflator. c. in the GDP deflator, but not in the consumer price index. d. in the consumer price index and in the GDP deflator.

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Answers (1)

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Kassandra Miles · Answer 1

Answer: Option (c) is correct.

Explanation:

If there is an increase in the price of imported coffee, this effect will be shows up in the GDP deflator but not in the consumer price index.

The net exports is a component of GDP, so there will be a decrease in imports of coffee. As it will become more expensive for the consumers who imported these goods.