QUIZ 3 - Inflation, Banks, & Government

This is comprised of a list containing a representative fixed bundle of goods and services that tracks price changes over time

• International price index

• Employment cost index

• Consumer price index

• Producer price index

This index excludes volatile economic variables

• Consumer price index

• Core inflation index

• Producer price index

• Employment cost index

Social security benefits coincide with inflation rates reported in which index?

• Producer price index

• Core inflation index

• Employment cost index

• Consumer price index

The ability to buy goods is determined by what economic concept?

• Real interest rate

• Purchasing powet

• Nominal interest rate

• Core inflation index

This period of declining prices over time and increasing debt load is representative of what economic concept?

• Inflation

• Hyperinflation

• Deflation

• Bubble economy

True or False? Inflation between 4-5% protects the economy against deflation and hyperinflation.

• True

• False

Answer explanation

Between 2-3%

How many Federal Reserve Districts are there?

• 7

• 9

• 12

• 14

If the Central Bank raises reserve requirements, does this limit or increase money available to be loaned out and what type of policy is this?

• Limit, Contractionary monetary

• Increase, expansionary monetary

• Limit, Contractionary fiscal

• Increase, expansionary fiscal

Implementation of higher interest rates are associated with what type of policy?

• Expansionary fiscal

• Expansionary monetary

• Contractionary fiscal

• Contractionary monetary

If the country is experiencing a recession, what could the Central Bank do to try and stimulate the economy?

• Lower interest rates through expansionary fiscal policy

• Lower interest rates through Contractionary fiscal policy

• Lower interest rates through expansionary monetary policy

• Raise interest rates through expansionary monetary policy