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Inflation & Productivityeconomics-mcqs › inflation-productivity
Published
1 Jun 2019
Last updated
28 May 2026

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Which scenario is most likely to cause the Consumer Price Index (CPI) in Pakistan to increase more than the GDP deflator?

Multiple choice question for Inflation & Productivity. Select an option, then review the explanation below.

Choose the correct answer

Explanation

The CPI measures the price changes of goods and services bought by consumers, including imported items like BMWs. Since BMWs are imported, their price increase affects the CPI but not the GDP deflator, which only considers domestically produced goods and services. Therefore, a rise in the price of imported BMWs leads to a higher increase in the CPI compared to the GDP deflator.

Practice related questions from the same subject.

  1. 1.According to the Phillips curve theory, when does unemployment revert to its natural rate?
  2. 2.What do menu costs signify in the context of inflation?
  3. 3.What is the effect of a rise in production costs on the economy?
  4. 4.What is the likely effect on the economy when injections into it increase?
  5. 5.Which of the following can trigger demand-pull inflation?

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