Different conclusions about relative inflation

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Year Price level Price level Exchange Real exchange rate For China for U.S rate 1997 100.0 100.00 0.12 0.12 1998 99.20 101.55 0.12 0.117 1999 97.81 103.77 0.12 0.113 2000 98.20 107.27 0.12 0.110 2001 98.91 110.29 0.12 0.108 2002 98.16 112.05 0.12 0.105 2003 99.30 114.62 0.12 0.104 2004 103.17 117.68 0.12 0.105 2005 105.03 121.65 0.12 0.104 The price level data in the table is for the consumer price index. Why might the GDP deflator give different conclusions about relative inflation in two counties?

Reference no: EM131009655

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