How does this affect the gdp deflator

Reference no: EM133336652

Question: Original question with correct answer:

Armani raises the price of Italian jeans it sells in the US. How does this affect the GDP deflator?

Original Answer: No change. Armani jeans are not produced in US borders, so therefore GDP is not affected.

My question: I don't understand why the GDP is not affected, I thought this change would be reflected in the net exports of GDP. Shouldn't net exports decrease (exports - imports) by the new import price of jeans as compared to the old which would mean GDP deflator decreases? Why doesn't it?

Reference no: EM133336652

Questions Cloud

What did you do to build relationships with the other party : HROD 500 Azusa Pacific University What did you do to build relationships with the other party? How difficult or easy was it to do? How did these relationships

Explain the entire process and include flowchart : ?New products will be introduced twice per year and old products retired. Explain the entire process and include flowcharts and distribution models.

How would an open market operation of bond purchase affect : How would an open market operation of bond/security purchase affect aggregate demand? Be sure to explain how each component of the AD function changes

How can curriculum implementation be improved : How can curriculum implementation be improved in your institution? AS a leader how will you involve teachers and students if at all in curriculum making

How does this affect the gdp deflator : why the GDP is not affected, I thought this change would be reflected in the net exports of GDP. Shouldn't net exports decrease (exports - imports)

Performance management and staff reductions : ADMN 4976A Algoma University Prepares one proposal, for the Union side, based on the information provided in Wally's Janitorial Services

Calculate the sharpe index for each investment and compare : Calculate the Sharpe index for each investment and compare their performance. Calculate the Treynor Index for each investment and compare their performance.

Describe role of distribution in the supply chain : Describe the role of distribution in the supply chain. Evaluate factors that have an influence upon the company's distribution channels.

How it might influence employee engagement : Choose one external factor we discussed and describe in detail how it might influence employee engagement.

User Account

All Pages