Exploring Inflation and Deflation Dynamics

What is inflation primarily characterized by?

• Decrease in the value of money

• Increase in stock market prices

• Stability in housing prices

• Decrease in unemployment rates

What extreme form of inflation was mentioned in the video?

• Reflation

• Stagflation

• Deflation

• Hyperinflation

What happens to purchasing power when inflation occurs?

• It is not affected

• It decreases

• It stabilizes

• It increases

Which index is used to measure inflation in the United States?

• S&P 500

• Dow Jones Industrial Average

• NASDAQ

• Consumer Price Index

Which category does the CPI not directly measure?

• Food and beverages

• Housing costs

• Consumer electronics

• Stock investments

Why is a small amount of inflation considered beneficial?

• It reduces public debt

• It increases consumer spending

• It promotes investment

• It encourages saving

What is one of the main causes of inflation according to the quantity theory?

• Lower interest rates

• Decreased consumer spending

• Excessive availability of money

• Increased government regulation

What can trigger demand-pull inflation?

• An increase in overall demand

• An increase in exports

• A reduction in taxes

• A decrease in production costs

What economic condition is the opposite of inflation?

• Boom

• Recession

• Hyperinflation

• Deflation

What is a potential negative effect of deflation?

• Increased investment

• Higher employment rates

• Economic growth

• Reduction in production