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Elucidate the relation among government purchases and the trade deficit and the difference among CPI and the GDP deflator.

1. What is the connection between an increase in government purchases and the trade deficit? (describe how the former affects the latter.)

2. How do the CPI and the GDP deflator differ? Why do economists believe that the CPI overstates the rate of inflation? Is this an important problem?

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922750

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