Inflation review

The rate of inflation is most commonly measured by use of

• a price deflator

• the GDP deflator

• the consumer price index

• all of the above

The consumer price index measures 

• the cost of buying a fixed basket of goods and services, and calculating how this cost changes from year to year

• the cost of buying a basket of goods and services, which changes from year to year depending on the price level

• the cost of buying a basket of goods and services, which changes from year to year depending on consumer tastes and preferences

• all of the above, depending on what the CPI is trying to measure

An increase in aggregate demand is likely to lead to

• demand-push inflation

• cost-push inflation

• demand-pull inflation

• cost-pull inflation

What is inflation?

• Inflation is an social studies term that describes a general increase in prices 📈 and a fall in the purchasing power of money 📉.

• Inflation is an economic term that describes a general increase in prices 📈 and a fall in the purchasing power of money 📉.

• Inflation is an economic term that describes a general increase in prices 📈 and a increase in the purchasing power of money 📉.

A little inflation is normal and even good for a healthy economy. Inflation becomes a problem when it grows too quickly.

• True

• False

Money supply creates inflation only when ...

• the money is printed slower than the economy grows.

• the money is printed faster than the economy grows.

• the money is printed at the same speed than the economy grows.

Inflation reduced people's purchasing power because

• the same amount of money buys ore goods and services

• the same amount of money buys fewer goods and services

• the market basket has to be changed every year

• there is not enough money in the economy

Who is most likely to be hurt by inflation?

• someone who borrowed money
• a retiree on a fixed income
• a business owner
• the U.S. government

Most countries try to maintain an inflation rate of ______ per year.

• One percent or less

• Two to three percent

• Four to five percent

• Six to seven percent

When inflation is high the _______________of the dollar decreases

• cost value
• purchasing power
• importance
• validity