Suppose the government increases taxes in the economy. Decrease, increase, increase. Increases, crowding out. The quantity of investment demanded will move to equilibrate demand and supply in the goods market through adjustments in r. The CPI can never be equal to the GDP deflator.
Income is allocated among factors of production based on their marginal productivities.
Answer all of the following questions. The total points for each question is as indicated in parenthesis. Use the table below to answer the following questions. Compute the GDP deflator for Year 2, using Year 1 as the base year. How much did prices change according to the CPI as calculated here.