During the mid-1980s, we observed a significant reduction in oil prices. In the United States, we would expect that this reduction in oil prices would cause
A. a larger reduction in the CPI compared to the GDP deflator.
B. an equal reduction in the CPI and GDP deflator.
C. a larger reduction in the GDP deflator compared to the CPI.
D. no change in the CPI and a reduction in the GDP deflator.
Answer:A
During the mid-1980s, we observed a significant reduction in oil prices. In the United States, we would expect that this reduction in oil prices would cause
A. a larger reduction in the CPI compared to the GDP deflator. B. an equal reduction in the CPI and GDP deflator. C. a larger reduction in the GDP deflator compared to the CPI. D. no change in the CPI and a reduction in the GDP deflator.