What is the difference between CPI and GDP deflator?

Question

Did I answer these questions correctly?



Sally: US Citizen 

Arthur: UK Citizen

(When I say GDP & CPI I mean exclusively for the US)

1) An airplane made in the US and bought by a US airline is part of the GDP

2) An airplane made in the US and bought by a UK airline is part of the GDP

3) An airplane made in the UK and bought by a US airline is NOT part of GDP nor CPI

4) An airplane made in the US and bought by Sally is part of the GDP and CPI

5) An airplane made in the UK and bought by Sally is part of the CPI

6) An airplane made in the US and bought by Arthur is part of the GDP

Answer 1

#3 - the GDP part is correct but the CPI part is not.

CPI does not take into account where a product was produced, only that it was purchased. Later on you will hear about "imported inflation" and this is an example of that. If the price of chocolate rises is that part of the USA's CPI? Yes. Does the USA grow chocolate? No. The same could be said of tea, imported steel or many other products.

What is important for CPI is that it is purchased.

What is important for GDP is where it is produced