Inflation and Unemployment

What is inflation?

• A decrease in prices

• An Increase in prices

• A rise in unemployment

• A fall in Gross Domestic Product

Which type of unemployment happens when workers are between jobs?

• Cyclical

• Structural

• Frictional

• Seasonal

What does CPI stand for?

• Consumer Price Index

• Cost Production Indicator

• Central Price Inflation

• Cumulative Profit Index

If inflation is too high what is a common response by the central bank?

• Lower interest rates

• Increase interest rates

• Print more money

• Reduces taxes

Which type of unemployment is caused by technological advancements replacing jobs?

• Frictional

• Cyclical

• Structural

• Seasonal

Which of the following best describes demand-pull inflation?

• Costs of production rise

• Consumers demand more goods than available

• Unemployment increases

• Taxes decrease

Which type of unemployment is most common during an economic recession?

• Frictional

• Seasonal

• Structural

• Cylical

How does inflation affect businesses?

• It increases purchasing power

• It raises production costs

• It lowers wages automatically

• It reduces exports

What is the main disadvantage of high unemployment?

• Higher consumer spending

• Increased wages

• Lower tax revenues

• Stronger economy

How does a high unemployment rate affect government finances?

• DeflationThe government collects more tax revenue.

• The government spends more on benefits and collects less in taxes

• The national debt decreases

• There is no effect on government finances