Macroeconomics & Public Policy

Question 1 {9 points) There are a number of statisticslindexes) computed to measure the price level, such as the GDP deflator and the CPI. The choice of which of these measures to use depends in manv cases on the specific question in which you are interested. For each of the following situations, state whether the CPI or GDP deflator is a more appropriate measure to use and explain why the statistic is preferred. a. You are interested in looking at the impact of higher prices of imported oil in the overall cost of living. [lpoint for correct name + 2 points for explanation = 3 Points] h. The government is interested in whether increases in defence spending are affecting the price level. [lpoint for correct name + 2 points for explanation = 3 Points} c. An economic consulting firm is investigating the impact on the aggregate price level of more computers and electronic technology used in production. {1point for correct name + 2 points for explanation = 3 Points}