Inflation Review Quiz

What is inflation?

• a rise in all prices

• a drop in most prices

• a rise in some prices

• a general rise in prices

The _______ is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

• Consumer Price Index

• Aggregate supply

• Producer Price Index

• Aggregate demand

Which of the following causes of inflation is often described as “too much money chasing too few goods”?

• Demand-pull inflation

• Cost-push inflation

• Demand-push inflation

• Cost-pull inflation

Fill in the blank: When inflation is high the _______________of the dollar decreases.

• cost value

• purchasing power

• importance

• validity

Demand-Pull inflation can be describes as too many _________ chasing too few __________

• jobs, workers

• consumers, producers

• dollars, goods

• banks, customers

Which of the following groups suffer from high inflation?

• Borrowers

• Lenders

• Taxpayers

• Property Investors

According to the wage-price spiral, if a company gives a worker a raise in pay, what must they also do?

• Raise the price of their products

• go out of business

• lower the price of their products

• merge with a competitor

GDP that is adjusted for inflation

• real GDP

• nominal GDP

• price level

• net national product

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

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

• lenders hurt, borrowers helped
• lenders hurt, borrowers hurt
• lenders helped, borrowers hurt 
• lenders helped, borrowers helped