Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 11 - Measuring the Cost of Living - Questions For Review - Page 231: 3

Answer

If the price of a navy submarine rises then the consumer price index is unaffected. Navy submarines are not part of consumer purchases and only affect the government spending portion of GDP.

Work Step by Step

Think about what type of product it is. This is for military use so it would be considered government defense spending and therefore does not impact GDP.
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