Indicate whether each scenario will affect the GDP deflator or the CPI for the United States. Check all that apply.

a. A decrease in the price of a Waterman Industries deep-water reel, which is a commercial fishing product used for deep-sea fishing, made in the U. S., but not bought by U. S. consumers (GDP Deflator / CPI)

b. An increase in the price of a Japanese-made phone that is popular among U. S. consumers (GDP Deflator / CPI)

Question

Business

Ashlyn Cooper

8 June, 11:56

Indicate whether each scenario will affect the GDP deflator or the CPI for the United States. Check all that apply.

a. A decrease in the price of a Waterman Industries deep-water reel, which is a commercial fishing product used for deep-sea fishing, made in the U. S., but not bought by U. S. consumers (GDP Deflator / CPI)

b. An increase in the price of a Japanese-made phone that is popular among U. S. consumers (GDP Deflator / CPI)

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Answers (1)

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Isaac Velez · Answer 1

GDP deflator; CPI

Explanation:

A decrease in the price of waterman industries in the deepwater reel is an example of GDP deflator as GDP deflator reflects the price of all goods produced domestically. The price will not affect the consumer price index.

An increase in the price of Japanese made phone will impact consumer price index because these phones are generally purchased by us consumers. The phones are not produced domestically that is why they will not affect GDP deflator.