Inflation, CPI, and the Market basket

Front

When Inflation occurs,

Back

The purchasing power of money decreases in the economy.

Front

__________ are common products that consumers buy in a month.(used for CPI)

Back

market basket

Front

Money loses its value when there is too much of it in the economy.

Back

There is too much of it in the economy.

Front

Someone buys a house with a 30 year fixed rate loan. How is this situation affected by inflation?

Back

helped by inflation

Front

A _______________ is a hypothetical set of consumer purchases of goods and services.

Back

Market Basket

Front

Which explanation best explains the effects of inflation?

Back

Inflation erodes (take away from) the purchasing power of the dollar.

Front

Which of the following causes of inflation is often described as “too much money chasing too few goods”?
Options: Demand-pull inflation, Cost-push inflation, Demand-push inflation, Cost-pull inflation

Back

Demand-pull inflation

Front

Fill in the blank: When inflation is high the _______________ of the dollar decreases.

Back

purchasing power

Front

An index that measures the prices of a market basket of goods that typical consumers purchase.

Back

Consumer Price Index

Front

According to the wage-price spiral, if a company gives a worker a raise in pay, what must they also do?

Back

Raise the price of their products