1. Business
  2. Economics
  3. 1 if the price of australianmade shoes imported into the...

Question: 1 if the price of australianmade shoes imported into the...

Question details
1). If the price of Australian-made shoes imported into the United States increase, then, at a result,

Answer: the GDP deflator increases but the consumer price index does not increase.

2). Suppose that U.S. mining companies purchase German-made ore trucks at a reduced price. By itself, what effect will this purchase have on the GDP deflator and in the CPI?

Answer: the CPI and the GDP deflator will be unaffected.

I juxtapose these two questions together because I don’t understand why, in both scenarios there is a price change in imported goods yet GDP deflator is only affected in the first scenrio.
Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution