Inflation and Deflation Quiz

Which statement does NOT describe inflation?

• Higher prices.

• Rise in purchasing power.

• Currency loses value.

Which statement does NOT describe deflation?

• Currency loses value.

• Rise in purchasing power.

• Lower prices.

Why does inflation occur?

Why does deflation occur?

Which one of the following is a consequence of inflation?

• Declining prices.

• Lower real wages.

• Higher purchasing power.

• Reduced investments.

Which of the following is a consequence of deflation?

• Increased value of money.

• Lower purchasing power.

• Increased investments.

• Decrease in standard of living.

Which statement does NOT accurately reflect the impact of inflation on savings?

• Inflation erodes the value of money saved.

• Inflation increases the purchasing power of saved money.

• Inflation can lead to higher interest rates on savings.

Which statement does NOT indicate a positive effect of inflation on the economy?

• Boost in business revenues.

• Increased consumer spending.

• Higher production costs.

Which statement does NOT reflect the relationship between inflation and interest rates?

• Higher inflation often leads to higher interest rates.

• Lower inflation can result in lower interest rates.

• Inflation has no impact on interest rates.

Which of the following is a common method used to measure inflation?

• Consumer Price Index (CPI).

• Gross Domestic Product (GDP).

• Unemployment Rate.