Which of these are likely to be winners in periods of high, unanticipated inflation?

Borrowers at fixed interest rates

Which one of these correctly describes how lenders and borrowers are affected by inflation?

lenders helped, borrowers helped

If a country had a CPI of 104.0 last year and a CPI of 101.0 this year, then

the average prices of goods and services decreased between last year and this year.

the average quality of goods and services between last year and this year.

the average prices of goods and services increased between last year and this year.

the quantity of consumer goods and services produced decreased between last year and this year.

While inflation is a rise in the general level of prices, economic growth is a

sustained period during which the nation's total output of goods and services increases.

short period during which the nation's total output of goods and services decreases.

short period during which the nation's total output of goods and services increases.

sustained period during which the nation's total output of goods and services decreases.

If CPI goes from 100 to 300 and your salary goes from $100,000 to $200,000, what happened to your purchasing power?

unable to determine with data given

What is the difference between Nominal and Real GDP?

Real GDP is adjusted for inflation, nominal is not

Nominal GDP includes imports from other countries, Real GDP does not

Real GDP represents the current year, nominal represents a base year

GDP per capita is found by

Muliplying GDP by the population

Multiplying GDP by the unemployment rate

Dividing current GDP by last year's GDP

To measure the CPI, the BLS economic assistants check the prices of

about 80,000 consumer goods and services each month.

some of the consumer goods but none of the services provided in a given year.

about 80,000 goods and services each quarter.

only the prices of the goods and services whose prices have changed.

all of the goods and services produced in a given year.

As price level in the nation's economy decreases,

foreign demand on goods decreases

How does nominal GDP differ from Real GDP?

Real GDP is adjusted for inflation because it is expressed in base year prices.

Nominal GDP is expressed in base year prices.

Real GDP does not reflect economic growth.

Nominal and Real GDP are the same.

Who is most likely to be hurt by inflation?

savers who put their money under their matress

When the cost of the CPI market basket increases from one year to the next, we know that

the prices of goods and services contained in the CPI market basket have increased on the average.

on the average, current prices are less than past year prices.

on the average, current prices are below base year prices.

the quantities of the goods and services contained in the CPI market basket have increased on the average.

either the quantities of the goods and services contained in the CPI market basket have increased on the average and/or the prices of goods and services contained in the CPI market basket have increased on the average.

Which explanation best explains the effects of inflation?

Inflation erodes (take away from) the purchasing power of the dollar.

Consumers have more products to choose from.

Inflation results in lower prices.

Demand increases because prices are higher.

Using GDP to measure a standard of living can be inaccurate because

our standard of living does not depend only on goods and services.

our standard of living depends solely on goods and services.

our standard of living only depends on used goods and services.

we use nominal GDP instead of real GDP.

What the definition of deflation?

decrease in the average price of goods and services

occurs when the price of goods and services rise

What is the main problem for people on a fixed income during a period of chronic inflation?

Their income will not increase, so their purchasing power falls.

They have to ask for an increase in wages to match inflation.

Their investments will not pay as much interest.

They have to wait for the government to react to the crisis.

The inflation rate is the

percentage change in the CPI from one year to the next.

difference between the current period CPI and the base period CPI.

difference in the price level from one year to the next multiplied by 100.

percentage change in composition of the CPI market basket from the base year to the next year.

difference between the base period CPI and the current period CPI.

If the price of a soda was 15 cents in 1970, when the CPI was 50, and 50 cents in 2007 when the CPI was 172, then the real price of

the 1970 soda in 2007 dollars is 52 cents.

the 2007 soda in 1970 dollars is $3.44.

the soda was 15 cents in 1970 and 50 cents in 2007.

AP Macro: CPI and Inflation

Authored by Jason Lee

Social Studies

11th - 12th Grade

Used 363+ times

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50 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

GDP that is NOT adjusted for inflation

real GDP

nominal GDP

price level

net national product

MULTIPLE CHOICE QUESTION

20 sec • 1 pt

GDP that is adjusted for inflation

real GDP

nominal GDP

price level

net national product

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The Consumer Price Index (CPI) is best used to determine

the Dow Jones Index.

the rate of inflation.

the unemployment rate.

currency exchange rates.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

When Inflation occurs,

Price decreases in the economy

The purchasing power of money decreases in the economy

The dollar appreciates on foreign exchange markets

Basic necessities become cheaper

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

If the Price of the Market Basket in 2008 is $40 and the Price of the Market Basket in the base year is $20, what is the CPI for 2008?

200

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Did prices go up or down in 2009?
2008 CPI = 212
2009 CPI = 214

Down

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Shawn just graduated from college. Why might Shawn benefit from rapid inflation in the economy?

Purchasing a home will be easier.

There will be more goods to purchase.

Businesses are more likely to hire during times of inflation.

Student loan repayments will not cost as much in real dollars.

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