Inflation Deflation

The rate of inflation is most commonly measured by use of

• a price deflator

• the GDP deflator

• the consumer price index

• all of the above

The consumer price index measures 

• the cost of buying a fixed basket of goods and services, and calculating how this cost changes from year to year

• the cost of buying a basket of goods and services, which changes from year to year depending on the price level

• the cost of buying a basket of goods and services, which changes from year to year depending on consumer tastes and preferences

• all of the above, depending on what the CPI is trying to measure

Disinflation is

• a fall in the price level

• a decreasing rate of inflation

• an increasing rate of inflation

• no change to inflation or deflation

What is Inflation?

• Inflation is a decrease in the general level of prices

• Inflation is an increase in the general level of prices

• Inflation is a number that that compares prices in one year with prices with some earlier base year

When inflation is high the _______________of the dollar decreases

• cost value
• purchasing power
• importance
• validity

A person who borrows a 30 year fixed rate mortgage is likely to benefit from inflation. True or False?

• True

• False

During a recession, inflation is likely to be..

• High

• Low

Which of the following is an effect of deflation?

• Decrease in unemployment

• Reduction in Production

• Increased spending on goods and services

• Increase in production

The opposite of inflation is

• Deflation

• Uninflation

• Lower prices

• CPI