How are the CPI and the GDP deflator alike? How do they differ?
They are both price indexes used to measure price changes over time. The CPI only includes prices of consumer items, while the GDP deflator includes prices of consumer items, producer goods, investment goods, exports and imports, and goods purchased by the government.
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Suppose the price of a natural resource like oil falls. What will be the effect on SRAS curve?
A. Movement to the left along the AS curve B. AS curve will shift to the left C. Movement to the right along the AS curve D. AS curve will shift to the right
The change in aggregate expenditures resulting from a movement in the domestic price level, which in turn changes the price of domestic goods in relation to foreign goods, is known as the:
a. international trade effect. b. multilateral equilibrium condition. c. international exchange rate effect. d. magnified international pricing effect. e. international deficit effect.