PDA

View Full Version : CPI/GDP Deflator


mattcarter15
Feb 2, 2009, 06:05 AM
For a closed economy, it is impossible for the GDP deflator and the CPI to move into opposite directions (for example, the GDP deflator increases while the CPI falls). Is this true or false and why?

Curlyben
Feb 2, 2009, 06:06 AM
Thank you for taking the time to copy your homework to AMHD.
Please refer to this announcement: Ask Me Help Desk - Announcements in Forum : Homework Help (https://www.askmehelpdesk.com/finance-accounting/announcement-font-color-ff0000-u-b-read-first-expectations-homework-help-board-b-u-font.html)

mattcarter15
Feb 2, 2009, 06:21 AM
I think the answer is this... but I'm not too sure. There are mainly two reasons the CPI and the GDP deflator move differently. First of all, the reason by the difference of the target affects this gap widely, besides the other reason such as the formula affects this gap, too.