Economics Unit 6 Inflation and Unemployment Hudspeth

What is inflation?

• rise in all prices
• rise in most prices
• rise in some prices
• rise in general prices

When inflation is high the _______________of the dollar decreases

• cost value
• purchasing power
• importance
• validity

What causes demand pull inflation?

• rise in price due to a decrease in supply
• a rise in price level due to an increase in consumption
• a rise in price due to an increase in the cost of production
• a decrease in price due to a decrease in supply

What causes cost push inflation

• An increase in demand for goods and services
• An increase in supply
• A rise in production costs passed on to consumers
• A fall in the price of imports

The Consumer Price Index (CPI)

• consists of items a typical 18-year old might buy for himself or herself.
• uses a representative market basket to calculate current price levels in an economy.
• is equal to 200 in whichever year is considered the base year.
• only increases in times of economic depression.

Which of the following groups suffer from high inflation

• teachers

• Lenders

• Taxpayers

• Property Investors

When the economy is experiencing an unemployment rate between 3-5%, an economist would say the economy is

• at full employment
• on the cusp of a recession
• entering into inflation
• at an unnatural rate

The Unemployment Rate is defined as

• percentage of unemployed people who are both willing & able to work

• percentage of unemployed people who are willing but not able to work

• percentage of unemployed people who are able but not willing to work

• the people that have stopped looking for work and in college

Changes in technology often eliminate one type of job. This represent what type of unemployment?

• Seasonal

• Cyclical

• Frictional

• Structural

Who does Inflation hurt?

• People with a fixed income

• Savers

• Money Lenders at fixed interest rates

• All of the above