Which statement correctly distinguishes the CPI from the GDP deflator?

• A. CPI tracks prices of all domestically produced goods and services; GDP deflator tracks prices of consumer goods.
• B. CPI tracks prices of a fixed basket of consumer goods; GDP deflator tracks prices of all domestically produced goods and services.
• C. CPI measures inflation in the capital markets; GDP deflator measures exchange rates.
• D. CPI uses a changing basket; GDP deflator uses a fixed basket.

Answer: (B)