Consequences of inflation

What is the main problem with inflation that countries have faced over the past 50 years?

• Stagnant economic growth

• Deflation

• Low rates of inflation

• High rates of inflation

What is the main cause of falling prices in Japan between 1995 and 2014?

• Low demand

• Global commodity prices

• High demand

• Government intervention

What is the real cost of borrowing if prices fall by 2% and the nominal interest rate is 1%?

• 1%

• 4%

• 2%

• 3%

What is the main problem with deflation?

• Increased consumer spending

• Negative impact on borrowing and spending

• Rising asset values

• Stable national income

What is the target for inflation set by many central banks today?

• 4%

• 3%

• 2%

• 1%

What is the effect of a rise in producer price index in China on the consumer price index?

• No effect

• Immediate rise

• Delayed rise

• Immediate fall

What is the main cause of the fall in inflationary pressures across most OECD member countries?

• Government intervention

• Weak demand

• Strong demand

• Rising energy costs

What is the impact of falling prices on consumer and business confidence?

• Boosts confidence

• Reduces confidence

• Unpredictable impact

• No impact

What is the likely effect of deflation on national income?

• No impact

• Stability

• Decrease

• Increase

What is the term for increases in prices that economic actors are able to predict with accuracy?

• Hyperinflation

• Unanticipated inflation

• Disinflation

• Anticipated inflation