Multiple Choice Questions on CPI consumer price index differs from GDP deflator index of prices 1 GDP deflator takes into a........... for UPSC Civil Services Examination (General Studies) Preparation

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Multiple Choice Questions

CPI consumer price index differs from GDP deflator index of prices 1 GDP deflator takes into a...........

Economic Affairs Inflation
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     CPI (consumer price index) differs from GDP deflator (index of prices)

    1) GDP deflator takes into account all the goods and services produced within the country but CPI does not.

    2) CPI includes prices of imported goods but GDP deflator does not.

    Choose the correct statement(s)

     Only 1

    Incorrect Answer

     Only 2

    Incorrect Answer

     Both 1 and 2

    Correct Answer

     Neither 1 nor 2

    Incorrect Answer
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    Explanation:

    1)  The goods purchased by consumers do not represent all the goods which are produced in a country. GDP deflator takes into account all these goods.

    2) CPI includes prices of goods consumed by representative consumer, hence it includes prices of imported goods. GDP deflator does not include prices of imported goods.

    By: Simrandeep Dhaliwal
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