Inflation and Deflation Flashcard

Front

What is inflation?

Back

When the prices of many goods and services across many sectors rise together

Front

What is deflation?

Back

When the prices of many goods and services fall together

Front

Which of the following is a common cause of short-run inflation? A change to the supply of a natural resource like oil, A decrease in population, An increase in government spending, A rise in technology use

Back

A change to the supply of a natural resource like oil

Front

According to Milton Friedman, what is always and everywhere a monetary phenomenon?

Back

Inflation

Front

What is one negative effect of high inflation for people on a fixed income?

Back

Their money purchases fewer goods and services

Front

What is hyperinflation?

Back

When the rate of inflation is many times the acceptable amount, sometimes hundreds or thousands of percent per month.

Front

Which of the following is NOT a common measure of inflation? Consumer Price Index (CPI), Producer Price Index (PPI), Personal Consumption Expenditures (PCE) price index, Gross Domestic Product (GDP) growth rate

Back

Gross Domestic Product (GDP) growth rate

Front

What is the main goal of the Federal Reserve regarding inflation?

Back

To keep inflation low and predictable

Front

Why are savers and lenders hurt by high inflation?

Back

Because their ability to buy goods and services over time is eroded if interest rates are less than the rate of inflation.

Front

What is an index in the context of measuring inflation?

Back

A ratio that illustrates the change in a value over time.