Question

Start your answer by selecting one of the options – “True”, “False” or “Uncertain” and then provide arguments to justify your selection (be brief and concise and present your arguments in 100 or less words). You need to ensure your assumptions are clear, reasonable and explicit if making any.

The world price of oil has fallen recently. For India (which is a net importer of oil), this development will imply that GDP deflator will fall by more than the CPI.

Answer 1

This statement "The world price of oil has fallen recently. For India (which is a net importer of oil), this development will imply that GDP deflator will fall by more than the CPI." is false as the GDP deflator donot include the prics of oil affects as it is not produced domestically in India but produced outside India and consumed in India.

And GDP deflator donot reflect such changes appropriately so relation between CPI and deflator is not defined thus this statement is false.

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