Consider the following statements with reference to Consumer Price Index CPI and GDP Deflator GDP de...........

Indian Economy Inflation

Consider the following statements with reference to Consumer Price Index (CPI) and GDP Deflator:

GDP deflator includes all goods and services produced in the country, while CPI does not.
CPI includes imported goods, while GDP deflator does not.
Weights assigned to each good is constant in CPI, while it changes in GDP Deflator.

Which of the statements given above is/are correct?

1 only

1 and 2 only

2 and 3 only

1, 2 and 3

Option 4th is correct.

Statement 1 is Correct: The goods purchased by consumers do not represent all the goods which are produced in a country. GDP deflator takes into account all such goods and services.
Statement 2 is Correct: CPI includes prices of goods consumed by the representative consumer, hence it includes prices of imported goods. GDP deflator does not include prices of imported goods.
Statement 3 is Correct: The weights are constant in CPI - but they differ according to production level of each good in GDP deflator.