AP Macro Inflation and Real GDP Review

When inflation occurs, the purchasing power of buyers:

• increases

• decreases

Deflation (in a macro sense) leads to:

• a decrease in spending

• an increase in spending

Which of the following refers to the increasing of prices but at a slower rate than previously?

• Hyperinflation

• Disinflation

• Deflation

• Stagflation

Which year is the base year?
1997 CPI = 95
1998 CPI = 97
1999 CPI = 100
2000 CPI = 104

• 1997
• 1998
• 1999
• 2000

The Consumer Price Index is 100 today and 105 in one year's time, what will the inflation rate be?

• 5%

• -5%

• 10%

• 105%

If CPI goes from 100 to 300 and your salary goes from $100,000 to $200,000, what happened to your purchasing power?

• Increase
• Decrease
• No change

Assume that an economy produces just two goods, X and Y, as shown in the table above. If year 1 is the base year, the consumer price index for year 2 in this economy is

• 100

• 175

• 250

The table above shows the consumer price index for selected years. On the basis of these data, how much did it cost in 1995 to buy the same goods and services that cost $50 in 1929 ?

• $25

• $100

• $125

• $250

• $300

Who is Hurt by Inflation? Pick 3

• Lenders

• Savers

• Borrowers

• People with fixed incomes

People who are helped by inflation. Pick 2.

• Borrowers

• Lenders

• A business where the price of the product increases faster than the price of resources

• Savers