When the price of apples gets too high and people substitute to pears the CPI wi

Question

When the price of apples gets too high and people substitute to pears the CPI will change accordingly GDP deflator will change accordingly They both will change accordingly Neither will change they are both a fixed basket of goods O D Question 23 Nominal GDP this year is 300% higher than last year. We can conclude that Production levels are higher this year Price levels are higher this year There is more unemployment this year We would need to know what the price levet was for each year to answer this question

Explanation / Answer

22. They both will change accordingly
Both CPI and GDP deflator will take into account the change in price level.

23. We would need to know what the price level for each year was to answer this question
Nominal GDP could be higher either because of higher price level or because of higher production or both.

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