Question

Question text

A leather jacket imported from Italy by a Canadian one month ago, is considered when computing the current Canadian ________. A new investment in research and development made by Roots, a publicly held Canadian brand, is taken into account when computing the current Canadian ________ but not the ________

Select one:

a. GDP deflator, CPI, GDP deflator

b. CPI, GDP deflator, CPI

c. CPI, CPI, GDP deflator

d. GDP deflator, CPI, CPI

Answer 1

Option B

GDP Deflator includes only domestic goods and not anything that is imported. This is different because the CPI includes anything bought by consumers including foreign goods. GDP Deflator is a measure of the prices of all goods and services while the CPI is a measure of only goods bought by consumers.The GDP deflator also includes the prices of investment goods.

Since leather jacket is imported good and bought by consumer so it is included in CPI.The investment made in rsearch and development by Canadian company is included in GDP Deflator as it is an investment. Moreover it is not bought by consumer. So, it does not form part of CPI.