Inflation.Deflation.Quick

Inflation is a(n)

• increase in prices

• decrease in prices

• neither

Deflation is a(n)

• increase is prices

• decrease in prices

• neither

Aggregate demand is

• demand for certain goods

• demand for all products produced

• neither

CPI

• measures the income of a country

• measures GDP

• measures increases/ decreases in prices over time

Which of the following is an example of cost-push inflation

• Demand for goods exceeds the supply of the goods and cost goes up

• Supply for goods exceeds the demand and price goes up

• The cost of goods/ services to make or provide a service increases- you operate a coffee shop and the cost of coffee increases- you pass the increase in price along to the consumer

Which of the following is an example of demand- pull inflation

• Apple manufactures only 100 new IPhones for the entire US

• Apple manufactures 100,000,000,000 IPhones for the entire US

Built-in inflation occurs when prices increase over time because of many factors- mainly wages increasing. The increase money supply causes prices of goods/ services to increase.

• T

• F

We tend to see deflation in certain industries- like technology- as new advances take place- older models decrease in price.

• T

• F

Inflation can stimulate the economy- as business earn more money because of higher prices- they tend to hire more employees and offer new products.

• T

• F

Deflation tends to occur during times of economic contraction.

• T

• F