Inflation and the Consumer Price Index

Inflation is caused by

• Too much money in the marketplace

• A Wage-Price spiral

• An excessive demand for products with not enough supply

• All of the above

As prices go up due to inflation, the consumers purchasing power

(a)  

What is the Consumer Price index

• A measure of prices of housing and rental costs all over the country

• An index determined by measuring the price of standard goods for only urban consumers

• An index of prices of items used by manufacturers and retailers

• An index of the cost of living for all U.S. consumers

Which of the following is not a goal of the Federal Reserve?

• growing the economy

• keeping banks safe

• printing money

• making payments secure

What tool does the Federal Reserve use to influence economic growth

• Monetary Policy

• fiscal policy

• demand and supply

• tax structure

If the Federal Reserve chooses to lower interest rates, they can assume that

• More people with bad credit scores can get a loan

• more borrowing will take place

• the Federal government's debt will fall

• Prices in the 'Market Basket for the CPI will lower

A "Market Basket" is used by the Bureau of Labor and Statistics to calculate the

• unemployment rate

• Consumer Price Index

• tax base

• business cycle