In 1979 and 1980

a. the U. S. inflation rate as measured by the GDP deflator was higher than that measured by the CPI, and the difference was explained by rapidly rising prices of goods exported by the U. S

b. the U. S. inflation rate as measured by the CPI was higher than that measured by the GDP deflator, and the difference was explained by rapidly rising prices of goods exported by the U. S

c. the U. S. inflation rate as measured by the GDP deflator was higher than that measured by the CPI, and the difference was explained by rapidly rising oil prices

d. the U. S. inflation rate as measured by the CPI was higher than that measured by the GDP deflator, and the difference was explained by rapidly rising oil prices

Question

Business

Harmon

29 May, 00:27

In 1979 and 1980

a. the U. S. inflation rate as measured by the GDP deflator was higher than that measured by the CPI, and the difference was explained by rapidly rising prices of goods exported by the U. S

b. the U. S. inflation rate as measured by the CPI was higher than that measured by the GDP deflator, and the difference was explained by rapidly rising prices of goods exported by the U. S

c. the U. S. inflation rate as measured by the GDP deflator was higher than that measured by the CPI, and the difference was explained by rapidly rising oil prices

d. the U. S. inflation rate as measured by the CPI was higher than that measured by the GDP deflator, and the difference was explained by rapidly rising oil prices

+5

Answers (1)

Know the Answer?

Nitro · Answer 1

D) the U. S. inflation rate as measured by the CPI was higher than that measured by the GDP deflator, and the difference was explained by rapidly rising oil prices

Explanation:

During the 1970s there was a very strong correlation between oil prices and the CPI. Oil is essential to our economy, since it is used in so many different ways, e. g. fuel, plastics, heating, etc. The oil prices increased from $15.85 per barrel on April 5, 1979 to $39.50 per barrel on March 3, 1980. That is a huge increase (149%) for only one year.

The CPI more than doubled during the 1970s, increasing from 41.20 in 1972 to 86.30 in 1980 (109% increase). It had previously taken 24 years for the CPI to double before that decade. That is a huge increase in inflation even if you compare it to more modern day inflation. The CPI for 2018 was 251, so in the last 38 years it increased by 190% and inflation has been an issue several times in the last decades.