Inflation Quiz

What is inflation?

• A decrease in prices
• A sustained increase in prices
• A temporary increase in prices
• A decrease in the money supply

How is inflation measured in the UK?

• Gross Domestic Product (GDP)
• Consumer Prices Index (CPI)
• Unemployment Rate
• Interest Rate

Why is inflation seen as a positive sign for the economy?

• It indicates consumer confidence
• It leads to higher profits for businesses
• It reduces the national debt
• It increases the value of the currency

What happens when inflation rises faster than people's incomes?

• Consumers can afford to buy more
• Businesses increase their prices
• Consumers' standard of living decreases
• Businesses' profit margins increase

What factors do companies consider when determining whether to raise prices in times of economic uncertainty?

• Market demand

• Production costs

• Competitor pricing

• All of the above

What is one of the challenges businesses face during periods of high inflation?

• Decreased demand for their products
• Increased competition from other businesses
• Rising costs of raw materials
• Lack of available capital

How can inflation impact businesses' expansion plans?

• It can make expansion more affordable
• It can make expansion less affordable
• It has no impact on expansion plans
• It can lead to increased demand for their products

What can businesses do to mitigate the impact of inflation on their costs?

• Increase their profit margins
• Decrease their profit margins
• Reduce their workforce
• Increase their prices

When prices are rising in an economy but at a slower rate, what is this called?

When prices are falling in an economy, this is called?