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When we say about "the basket used for calculating the CPI is the same as the composition of GDP" What does it mean the "same basket"? Does it just mean the goods and service are the same but the weights of each good itself do not matter?(Basket of CPI and GDP are also included A and B but no matter weights) . Or it means the weights of each good in the basket are the also same? (Basket of CPI and GDP are included A and B, also the weights of A is 0.4 and B is 0.6 in both baskets)

I'm really confusing.

In additon, this is the original question though I think it would be useless for this question:

"Assume that the basket used for calculating the CPI is the same as the composition of GDP. Will CPI in a given year then equal the GDP deflator? If so why, if not why not?"

Thanks to all the people willing to help!!

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  • $\begingroup$ Do we say "the basket used for calculating the CPI is the same as the composition of GDP"? It seems highly unlikely, except possibly for the consumer expenditure element of GDP. It does not make much sense for other components of GDP (expenditure basis) such as investment or government expenditure or trade; nor does it for other measures of GDP $\endgroup$ – Henry Sep 1 at 22:06
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Same basket means same goods and services at factor cost or market price. Weighting method could be different.

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