Inflation and Unemployment

Inflation can best be defined as...

• A general increase in prices.

• An increase in prices of key items purchased by consumers.

• The increase in the value of fiat money

• The printing of too much paper money.

Inflation is most likely to occur during which phase of the business cycle

• Expansion

• Contraction

This type of inflation occurs when an increase in the in production costs are passed on to the consumer.

• Supply Inflation

• Cost Push Inflation

• Imported Inflation

• Demand Pull Inflation

This type of inflation occurs when the demand for products is greater that the supply of products.

• Cost push inflation

• Demand pull inflation

• Divisional inflation

• Structural inflation

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

When inflation is high the _______________of the dollar decreases

• cost value
• purchasing power
• importance
• validity

Who does Inflation hurt?

• People with a fixed income

• Savers

• Money Lenders at fixed interest rates

• All of the above

Who among the following would be considered as unemployed?

• A college student of legal age to work but who is still in school full time.

• An entrepreneur in the process of starting a new business.

• A secretary who was laid-off from work & is looking at job ads

• A housewife taking care of three children.

Unemployment is most likely to occur during an economic expansion

• True

• False

• 12

• Mr. Bush

The phase of a business cycle in which unemployment at the lowest level is a ________________.

• expansion

• contraction / recession.