Inflation

What is inflation?

• rise in all prices
• rise in most prices
• rise in some prices
• rise in general prices

An index that measures the prices of a market basket of goods that typical consumers purchase.

• Consumer Price Index
• Federal Reserve
• Bank
• Deflation

Demand-Pull inflation can be describes as too many _________ chasing too few __________

• jobs, workers
• consumers, producers
• dollars, goods

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

What 2 types of inflation are there?

• demand pull and cost push
• demand pull and supply glut
• supply glut and demand side
• supply inflation and demand inflation

What causes demand pull inflation?

• rise in price due to a decrease in supply
• a rise in price level due to an increase in consumption
• a rise in price due to an increase in the cost of production
• a decrease in price due to a decrease in supply

If aggregate demand rises faster than producers can supply goods services

• demand-pull inflation
• cost-push inflation
• 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

Most countries try to maintain an inflation rate of ______ per year.

• One percent or less

• Two to three percent

• Four to five percent

• Six to seven percent

Which of the following types of inflation interferes with a company’s ability to plan for the future?

• Expected inflation

• Unexpected inflation

• Creeping inflation

• Galloping inflation