GWC N5 Economics Revision

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.

Inflation causes a persons real income to rise

• true
• false

Those on fixed incomes will be vulnerable to rising inflation

• true
• false

Savers and lenders benefit from inflation

• true
• false

As a consequence of inflation workers may demand higher wages

• true
• false

Exports become more competitive because of inflation

• true
• false

Firms tend to invest more in times of rising inflation

• true
• false

Inflation causes an increase in government spending on state pensions and benefits

• true
• false

Unemployment may fall during periods of rising inflation

• true
• false

This happens when there is a decline in demand in an industry. This could be because of foreign competition.

• cyclical
• seasonal
• structural
• regional