Edexcel Economics Y12 Macro Test Revision

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

Who is most likely to be hurt by inflation?

• someone who borrowed money

• a pensioner on a fixed income

• a business owner

• the U.K. government

If income remains the same, while the average price level doubles, then:

• Nominal income will fall

• Real income will fall

• Nominal interest rates will fall

• Purchasing power will rise

A process that brings the inflation rate down is called:

• Disinflation

• Deflation

• Stagflation

• Hyperinflation

The consumer price index reflects the:

• Changes in the prices of goods and services typically purchased by consumers

• Level of prices for intermediate goods and services purchased by businesses

• Prices of all goods and services computed from nominal GDP to real GDP

• Average price of groceries purchased by consumers

GDP that is NOT adjusted for inflation is

• real GDP

• nominal GDP

• price level

• net national product

Which year is the base year?
1997 CPI = 95
1998 CPI = 97
1999 CPI = 100
2000 CPI = 104

• 1997
• 1998
• 1999
• 2000

Inflation is usually higher during what part of the Business Cycle?

• upswing 
• recession
• trough
• boom

Economists consider inflation to be a negative event because

• inflation encourages consumers to buy goods made in the UK rather than imports

• It increases the rate of savings

• It means a recession is around the corner

• It leads to uncertainty and makes investment more risky

Which BEST describes GDP?

• It is a measure of what is happening to prices in an economy
• GDP  measures how much is produced in an economy in a given time period
• It is the data used to determine how many people are employed
• GDP is used to determine the inventories of businesses around the us