AP Macroeconomics - Unit 2 Inflation

An increase in the supply of money that leads to an increase in prices.

• Inflation

• Deflation

A decrease in the general price level of goods in services that can be negative in the long run by driving down the GDP and raising unemployment.

• Inflation

• Deflation

When the actual inflation rate is greater than the anticipated inflation rate, which of the following is most likely to suffer?

• Those who lend at a fixed interest rate
• Those who borrow at a fixed interest rate
• Retired persons with cost-of-living adjustment in their benefits
• Employers who hire workers with longterm labor contracts

If you live on a fixed income, how will you be affected by inflation.

• You are hurt because your purchasing power has decreased.
• You are helped because your purchasing power has increased.
• You are helped because interest rates rise.
• You are hurt because interest rates rise.

A general rise in overall prices is called:

• Deflation
• Inflation
• Consumer Price Index
• Federal Reserve

What occurred between June and July of 2016?

• Inflation
• Hyperinflation
• Deflation
• Cost-push Inflation

What occurred between 2007 and 2008?

• Inflation

• Deflation

• Hyperinflation

• Consumer Price Index

Who is most likely to be hurt by inflation?

• someone who borrowed money
• a retiree on a fixed income
• a business owner
• the U.S. government

If the consumer price index (CPI) were 131 at year-end 1999 and 125 at year-end 1998, then inflation during 1999 was 

• zero; prices were stable during 1999
• 4.8 percent
• 6.0 percen
• 8.4 percent

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