Macroeconomics - Inflation

A general, sustained upward movement of prices for goods and services in an economy.

• Interest

• Inflation

• Purchasing Power

• Market Basket

Which statement is true about inflation?

• is a concern for the nation's economy but not for individuals

• affects individual consumer in different ways

• is a concern for individuals but not for the overall economy

• causes the value of a dollar to increase over time

The Federal Reserve...

• does not monitor the inflation rate

• seeks to achieve an inflation rate above 5%

• seeks to achieve inflation that averages 2% over time

• seeks to achieve an inflation target of 0 %

All consumers experience the same inflation rate becasue everyone buys the same market basket.

• True

• False

When personal incomes increase at the same rate as the inflation rate, purchasing power increases.

• True

• False

Inflation only affects consumers who have high incomes.

• True

• False

Inflation is important to cosider when revising a personal budget.

• True

• False

This includes 80,000 items that are sorted into 200 categories and 8 major groups (housing/food/energy) and helps determine inflation.

• CPI Market Basket

• Inflation calculator

• Bureau of Labor and Statistics

• Interest Rate

What is the Federal Reserves "Dual Mandate"

• Low employment and high prices

• Low taxes and maximum employment

• Stable prices and maximum employment

• low interest rates and many savers

What is a typical "normal - healthy" inflation rate?

• 10%

• 2%

• 0%

• 12%