GWC N5 Economics Inflation 1

Inflation is…

• The annualized percentage change in a general price index, usually the consumer price index, over time.
• Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.

CPI stands for

• Consumer Purchasing Investment
• Consumer Profit Index
• Consumer Price Index

The rate of inflation is…

• The annualized percentage change in a general price index, usually the consumer price index, over time.
• The sustained increase in the general price level of goods and services in an economy over a period of time.

The living costs and food survey measures

• Average weekly household borrowing to buy goods and services in the UK.
• Average weekly household expenditure on goods and services in the UK
• Average weekly household savings on goods and services in the UK

The items making up the inflation basket used to calculate the UK consumer price inflation indices is called

• CPI
• Living costs and food survey
• basket of goods and services

This inflation is initiated by an increase in aggregate demand

• Cost push
• Demand pull
• Imported

This inflation occurs when firms respond to rising costs by increasing prices in order to protect their profit margins.

• Demand pull
• Increased money supply
• Cost Push

This is the amount of goods and services that can be purchased with a unit of currency

• CPI
• Purchasing power
• Cost Push

If the cost of rarw materials rises this could cause…

• demand pull inflation
• cost push inflation

Inflation causes a persons real income to rise

• true
• false