Money and Inflation Day 4 and 6

Which of these is NOT true about inflation?

• Inflation lowers consumer purchasing power.

• Inflation means ALL goods and services are more expensive.

• Inflation is a general rise in prices throughout the economy.

Jose got a 6% raise in his salary, but the rate of inflation is 2%. What is Jose's REAL rate of salary increase?

(a)  

• 4%
• 5%
• 2%
• 3%

You loaned a friend $100 for a year. You are charging her 5% interest. The inflation rate over the year was 2%. You real rate of interest was:

(a)  

• 3%
• 5%
• 2%
• -2%

Which of these is true about inflation?

• Inflation lowers consumer purchasing power.

• Deflation is good, while inflation is bad for the economy.

• Inflation is a general rise in prices throughout the economy.

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

• Consumer Price Index
• Federal Reserve
• Bank
• Deflation

When inflation is high, the (a)   of the dollar decreases.

• purchasing power
• cost value
• importance
• validity

What is inflation?

• Increase in the general price level of goods and services

• Increase price level from one private organisation

• Decrease general price level of goods

• Increase general price level of services

Jeanna is stoked that the value of her S&P 500 Index Fund increased by 8% last year. The rate of inflation is 6%. What is Jeanna's REAL rate of return on her investment?

​ (a)  

• 2%
• 4%
• 8%
• 10%

What is the true measure of wealth?

• How much money you have

• How many resources you have, like land

• How much purchasing power you have

• How much you are able to borrow

What is the relationship between inflation and purchasing power?

• Inflation causes purchasing power to increase

• Inflation causes purchasing power to decrease.

• Inflation has no effect on purchasing power.