Economics and Inflation

What is inflation?

• Inflation is an social studies term that describes a general increase in prices 📈 and a fall in the purchasing power of money 📉.

• Inflation is an economic term that describes a general increase in prices 📈 and a fall in the purchasing power of money 📉.

• Inflation is an economic term that describes a general increase in prices 📈 and a increase in the purchasing power of money 📉.

A little inflation is normal and even good for a healthy economy. Inflation becomes a problem when it grows too quickly.

• True

• False

All governments and central banks try and control inflation with market regulation.

• True

• False

The two main components of inflation are

Inflation is ...

• Rise in costs of goods and services

• % increase or decrease in prices over a period of time

Inflation rate is ...

• Rise in costs of goods and services

• % increase or decrease in prices over a period of time

What causes inflation?

• inflation occurs when there's an increase in production costs OR when demand for products and services increases faster than supply

• inflation occurs when there's an increase in production costs OR when demand for products and services increases slower than supply

• inflation occurs when there's a slower increase in production costs OR when demand for products and services increases faster than supply

What are the three main causes of inflation?

Money supply creates inflation only when ...

• the money is printed slower than the economy grows.

• the money is printed faster than the economy grows.

• the money is printed at the same speed than the economy grows.

What are the three ways governments can contral inflation?

• Monetary Policy, Fiscal Policy, Exchange Rates

• Fiscal Policy, Supply and Demand

• Monetary Policy, Supply and Demand