Learning Objectives: Inflation

What is inflation?

• A decrease in the general level of prices of goods and services.

• An increase in the general level of prices of goods and services.

• A measure of the value of money over time.

• A method to calculate GDP.

Fill in the blank: A dollar today is worth more than a dollar ________.

• tomorrow.

• yesterday.

• last year.

• next week.

What is deflation?

• An increase in the general level of prices for goods and services

• A decrease in the general level of prices for goods and services

• The same as inflation

• None of the above

Fill in the blank: Disinflation is a situation where prices are rising but the rate of increase is ______.

• slowing down

• speeding up

• remaining constant

• fluctuating

During the early 2000s, the US housing market was booming due to:

• Low interest rates and easy credit availability

• High unemployment rates

• Strict lending standards

• Decreasing population

What happened to the demand for housing in 2007?

• The demand for housing increased significantly.

• The demand for housing remained stable.

• The demand for housing decreased significantly.

• The demand for housing fluctuated unpredictably.

The collapse of the banking system during the Great Recession had a significant impact on:

• global financial markets

• local small businesses

• housing market

• all of the above

Which of the following statements is true about the Great Recession?

• The prices for houses increased significantly.

• The banking system remained stable.

• Prices of goods were reduced significantly, causing deflation.

• Investors continued to profit from the housing market.

In the U.S., in the 1980s, what was the highest inflation rate recorded?

• 10.5%

• 13.5%

• 15.5%

• 19.5%

What action did the Federal Reserve take to address the economy in the 1980s?

• Lowered interest rates

• Raised interest rates to 19.39%

• Increased government spending

• Decreased taxes