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Inflation Practice Test

Authored by MAX MEIER

Social Studies

9th - 12th Grade

24 Questions

Inflation Practice Test
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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Imagine that banks lend billions of dollars at a fixed nominal interest rate of 5%. Inflation then unexpectedly increases from 2% to 4%. What is the real interest rate they are earning?

1%

2%

3%

4%

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Where does the BLS derive the basket of goods and services used to construct the CPI?

A random sample of all goods and services produced in the economy

The goods and services typically bought by urban consumers, according to Bureau of Labor Statistics surveys

Toods and services weighted by the ratio of expenditures on them relative to the consumption component of GDP

The least and the most expensive goods and services in each major category of consumer expenditures

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Imagine the consumer price index was 140 in 2019 and 149.1 in 2020. The economy’s inflation rate for 2020 was

6.1%

6.5%

9.1%

49.1%

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Demand-pull inflation may be caused by

a nationwide increase in consumer spending due to an increase in consumer income

an increase in the cost for the business, which is then passed on to the consumer

an increase in the cost for the business, which is then passed on to the consumer

an decrease in the quantity of money that leads to higher prices

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following groups suffer the most from unexpected inflation?

borrowers of loans with a fixed interest rate

lenders of loans with a fixed interest rate

the wealthy

people who have a COLA built into their wages

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If the CPI increased from 80 to 84, the rate of inflation is

4%

5%

10%

20%

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Unexpected inflation will

hurt borrowers

hurt lenders

hurt borrowers and lenders equally

have no effect on either borrowers or lenders

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