3.3 Inflation & Limitations of CPI

Multiple Choice

True or false: CPI accounts for changes in quality of products

• True

• False

Multiple Choice

True or false: wealthier households are more sensitive to the effects of inflation.

• True

• False

Multiple Select

Which of the following might CPI NOT accurately capture? (check all that apply)

• The goods & services consumed by the average household

• The goods & services consumed by the university students

• The goods & services consumed by retirees

• The goods & services consumed by those earning a median income

Multiple Choice

True or false: CPI measures the value of a fixed / same basket of goods & services.

• True

• False

Multiple Choice

CPI is most useful in comparing inflation

• Over short periods of time

• Over long periods of time

Multiple Choice

Cost-push inflation causes...

• An inflationary gap

• A recessionary gap

• No change in national income

Multiple Choice

Cost-push inflation is caused by...

• An inward shift of SRAS

• An outward shift of SRAS

• An inward shift of LRAS

• An outward shift of LRAS

Open Ended

Define inflation.